deen

03 September 2020

Monthly Sector Analysis: Positive performance in August & the connection to DeFi

Daniel Kukan

Daniel Kukan

Senior Trader bei Crypto Broker AG

Über den Autor

All FTX indices (ALT/MID/SHIT) recorded a positive performance in August; the Shit Index in particular outperformed the others by far: ALT Index (+16%), MID Index (+19%), and SHIT INDEX (+47%). The performance of BTC$ during the same period was mildly positive (+2.5%). Most of the performance-driving coins have a connection to the decentralised finance ecosystem. We will elaborate a bit more on this when we dive into the different sectors and highlight some of the high performing coins.

Not all ALT constituents (nine coins) performed positively. The picture looks very mixed: BSV (-15.7%), XRP (-10.5%), and BCH (-6.50%) showed a negative performance. The winning coins are yet again ETH (+10.50%), and BNB, EOS, and LTC (all roughly +5%). Within the MID constituents (24 coins), the performance was mixed: 18 coins performed positively, whereas six coins were negative. The performance range of coins within the MID Index showed a very volatile picture with ADA losing 15.5% and XEM gaining +143%. The SHIT constituents (50 coins) are the winners of the month with +47%. Only three coins performed negatively and the rest performed significantly, e.g. OMG (+235.5%). You will find more performance values for each coin in the graphs below within each relevant sector.

Aside from the outperformance of the SHIT vs. ALT and MID indices with a similar performance, not many coins have been in favour of the bull market. When comparing the performance of some coins against the BTC$ market, we see a different picture now than in July 2020. ALT coins only outperformed BTC$ by approx. 7%, MID coins by 18%, and SHIT coins by 43%.

We need to review our sector labelling since some of the coins have changed (even in Messari) since we started publishing our reports. We will have this ready for our Q3 2020 report.

Below you will find the performance chart of our sectors relative to the total overall index.

Winning sectors relative to the Index were Interoperability, File Storage, Platform, and Payment. Losing sectors were Store of Value, Privacy, IoT, Exchange, and Others.

Store of Value (SoV)

SoV is experiencing what every “old toy” goes through when a child gets a shiny and fancy new toy (DeFi) for their birthday. The SoV coins are currently boring and have no relevance to the trading community. But do not write them off just yet. As soon as the battery of the fancy toy dies, the child will happily start playing with the old one again, which worked well in the past and is not as high maintenance.


Privacy


Platform

Overall performance does not look great but some of the top outperformers are linked to DeFi. The network congestion that Ethereum is experiencing has led to a push for other platforms/solutions and their token price. We have two underperformers, one of which comes as a surprise to us: Cardano is doing exceptionally poorly. It has had a good run since April, but nothing exceptional compared to its peers in the sector. We will keep an eye on this to see if it catches up. The performance of ETC is actually not a surprise, with multiple 51% attacks over the past few weeks. On the contrary, we are surprised that the performance is not worse.


Payment

OMG is one of the coins we need to think about relabelling. It is more akin to that of a platform token. With the DeFi hype and the Ethereum network issue, their use case comes in handy and people jumped on the train and bought it up.


Internet of Things


Interoperability

A massive winner in the DeFi hype is the interoperability sector. Moving value across blockchains and providing oracle services are “the” services that fire up DeFi.


File Storage

Another token, LAMB, might also need relabelling. Multi-chain data co-storage and cross-chain data management may sound like buzzwords, but they make sense in terms of the scalability issues in the DeFi space.


Exchange

We are not surprised by the underperformance of the exchange sector. This is due to the fact that most of these coins are CEX (centralised exchanges). The coins that performed well are on the DEX side.


Entertainment


Others

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