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September saw historically large moves in bonds, which spilled over into currencies, equities and even crypto-currency pairs. The last days of the month brought a reprieve but none of the fundamentals that provoked the swings have changed, which could make for an interesting October. As part of BEQUANT’s Monthly market report, summarizing key events, the research team have looked at the YTD Select Major Currencies vs the USD and current account deficits, as well as BTC and ETH’s positive quarterly performance versus the Nasdaq and the S&P. Finally, they highlight BTC’s market dominance, which has recently seen four-year lows, and the rise of Optimistic rollups.
YTD Select Major Currencies vs the USD
Martha Reyes, BEQUANT’s Head of Research said, “Most major currencies are underwater against the USD, with BRL holding up due to high real rates and RUB subject to capital controls. FX volatility, as per the JPM Volatility Index, is now at its highest since March 2020.
Implied currency volatility had been suppressed as central banks kept a lid on rates. As rates rise and the USD strengthens, nations with deficits or low real rates are most vulnerable to weaker FX and higher borrowing costs”
Q3 Cumulative BTC/ETH/Nasdaq/S&P Returns
Martha Reyes, BEQUANT’s Head of Research said, “Thanks to the catalyst from ETH’s proof-of-work shift, it outperformed BTC and US equities by a wide margin, with BTC also slightly ahead in the quarter, though September was a less favorable month.
If volatility in equities catches up to the bond market, we would expect that to feed through to crypto and erase gains.”
BTC/ETH Market Cap Dominance
Martha Reyes, BEQUANT’s Head of Research said, “ Bitcoin’s market cap dominance has rebounded from a 4-year low around Ethereum’s shift to proof-of-stake but is still well off recent highs during the launch of the futures ETF and the turmoil last June.
BTC used to overshadow the ecosystem, but dominance dropped from over 70% at the end of 2020 to 39% today, as the sector, particularly Ethereum and stablecoins, evolved.”
Optimistic Rollups Daily Transactions and TVL
Martha Reyes, BEQUANT’s Head of Research said, “Optimistic rollups Arbitrum and Optimism (OP) are gaining ground as Vitalik Buterin-sanctioned Layer 2 scaling solutions on the PoS Ethereum blockchain.
The leading lending and borrowing platform, Aave, dominates OP while derivatives DEX, GMX has the highest TVL on Arbitrum. The latter just had an upgrade to improve throughput and reduce fees but has no native token.”
