05 Februar 2020

Index Sector Analysis: a new monthly research report

Patrick Heusser

Patrick Heusser

Senior Trader bei Crypto Broker AG

Über den Autor

As yesterday’s sneak peek preview in our Daily Market Commentary promised, we are today presenting you with our first monthly sector analysis report. It is based on the three FTX indices (ALT, MID, and SHIT).

Before we dive into the details, we would like to show you and analyse some general key figures. Please also bear in mind that these performance numbers are all against USD, whereas the performances and comparisons in our Rotation Report are against bitcoin. Nevertheless, there is a connection between our Rotation Report analysis and the Index Sector Analysis. Whenever we see rotations out of bitcoin into altcoins, there will be more volatility within the individual coins inside of their respective sector.

The overall performance of the three indices (equally weighted) for the month of January was +47% compared to +32% in BTC$.

There is no doubt that the overall crypto asset market started very positively into the new year. But let’s take a look under the hood of the FTX indices.

On the picture below, you can see the overall performance divided into our own sector labels:

At first glance, it shows us a pretty diverse picture, with an outperforming sector (Interoperability), and three underperforming sectors (Payment, File Storage, and Exchange). The rest is +/-10% around the index performance.

Now, let’s have a look at the individual parts beneath the hood.

SoV (Store of Value)

One coin made all the difference – BSV (Bitcoin Cash Satoshis Vision). With a whopping +140%, it is the clear outperformer in this sector. The rally was driven by announcements made by Craig Wright and a possible listing of BSV at a large Asian exchange.

Privacy

The privacy sector was one of the winning sectors in January. The geopolitical situation at the beginning of the year (Iran) led to a massive rotation. Coins, e.g. XTZ and ZEC performed over 100%. One of the major investors in the XTZ project is Roger Keith Ver: an early promoter of bitcoin. Aside from him, there are many US organisations that have been recognised as investors. The entire organisation is distributed around the globe. ZEC is represented by many individual investors: also Barry Silbert: Investor in ETC and Key Founder of Grayscale Investments. Grayscale Investments is a company that manages and invests in cryptocurrency investment funds. The assets under management are far beyond $2 billion.

Platform

Here we have seen an overall neutral performance compared to other sectors. The Top 3 performing coins were AION and ELF (both Shit Index) and ETC (Mid Index). AION is a relatively new coin that launched in April 2018. The project is widely funded by worldwide investors. ELF’s organisation is based in Singapore, and approx. 63% of the initial supply is owned by the founders and the project. Ethereum Classic (ETC) is an old coin with an interesting history for the past five years. The launch of Ethereum in 2015, and the DAO Hard Fork in 2016 led to ETC. 84% is in the hands of investors – mainly Barry Silbert – whereas the organisation is based in Hong Kong and New York. The last Hard Fork “Agharta” in January 2020 and the upcoming halving in March 2020 has led to outperformance both in general and when compared to its sector constituents.

Payment

We have decided to put DASH in the payment sector. This is because over 80% of the transactions are processed outside of their „shielded“ functionality. Dash was the payment sector’s saviour. It is still showing negative performance against the index, but it would have been much worse without the +119% of DASH. I believe that the performance of DASH performance is linked to the outperformance of privacy coins as a whole (see privacy sector above).

Others

DGD helped to push this mixed sector into positive territory. The performance is most probably driven by a governance vote to liquidate or give the ETH treasury holdings back to the DGD coin holders. You can find more details on this here.

IoT (Internet of Things)

The IoT sector performance relative to the Index has been slightly down. The coin performing most has been IOTA, with a dollar performance of 80%. IOTA is run by individuals and the IOTA Foundation. Advisors and investors are broadly represented. The coin was launched in 2015, raising a total capital of approx. $434k. Over 90% are owned by investors. There has been a great deal of positive news so far, e.g., on January 16, 2020, when a new report issued by Fundstrat described the possibility that IOTA could become the global industry standard and grow to $700 billion by 2035. A recent negative news item, however, about the IOTA project stated that one of the IOTA Founders was threatening with legal actions over a dispute involving 25 million tokens. The outstanding supply is currently 2.779 billion tokens.

Interoperability

The darling under the Top 100 coins for January was ICX. With a performance of +369%, the coin demonstrated the definition of a parabolic move. Some good news in December 2019 in combination with the Chainlink collaboration headline in early January set this coin on fire.

The previous darling, ATOM, was unable to repeat its performance pace from the last quarter of 2019. Actually, the coin even underperformed the most in this sector being up only 2%.

File Storage

Not much happening here. Underperformance across the overall index is pretty much equally distributed.

Exchange

LEO is the spoilsport here. There are only three coins that have demonstrated a negative performance against the index and LEO is one of them – down 2%. My guess is that it reflects the steady loss in market share of Bitfinex over the past few month compared to Binance and some other Asian exchanges.

Entertainment

We only have four coins in this sector. There is a clear 50/50 distribution of winners and losers. REP and ENJ are on the winner side with a solid performance of +67% and +73%.


This report – „Index Sector Analysis“ – is the newest addition to our research & analysis reports. It will come out once a month and will provide insights into the coins in the three FTX indices.

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