CryptoQuant Weekly Round-Up [07-16-23 -- 07-23-23]
Welcome to our CryptoQuant weekly round-up, where we review the performance of the digital assets world and share insights about the trends in cryptocurrency market.
Weekly Performance Summary
Over the past week, cryptocurrencies demonstrated a mixed trend. On one side, we saw the stellar performance of Stellar Lumens (XLM-USD) with an impressive 22.54% weekly gain. This was followed by Chainlink (LINK-USD) which enjoyed a 17.29% uptick. On the downside, the major losers for the week included Bitcoin Cash (BCH-USD), Ethereum (ETH-USD), and Litecoin (LTC-USD) with declines of -4.36%, -2.68%, and -2.17% respectively. Bitcoin (BTC-USD) and Ethereum (ETH-USD), two of the largest cryptocurrencies by market cap, saw negative weekly changes with -1.24% and -2.68% respectively. The strong correlation between these two cryptocurrencies, as well as with the wider cryptocurrency market, was once again evident this week.
Cryptocurrency Risk Analysis
Assessing the risk relative to the S&P 500 index, we saw that XLM-USD and ZRX-USD showed the highest risk with a standard deviation of 0.215415 and 0.161691 respectively, significantly higher than the S&P 500 risk benchmark of 0.010075. On the other hand, BTC-USD and ETH-USD demonstrated less volatility compared to the wider market with a standard deviation of 0.033585 and 0.037796 respectively, implying that these might be comparatively safer investments in the crypto world.
Year-to-Date (YTD) Performance
In terms of YTD performance, Bitcoin Cash (BCH-USD) emerged as the best performer with an impressive 153.95% gain, followed by Ripple (XRP-USD) and Stellar Lumens (XLM-USD) with 128.03% and 116.60% respectively. Bitcoin (BTC-USD) and Ethereum (ETH-USD) have also registered decent YTD gains with 79.90% and 57.55% respectively.
On the contrary, few currencies have struggled this year, including Cosmos (ATOM-USD) and Zcash (ZEC-USD) registering negative YTD returns of -0.36% and -15.33% respectively.
Diversification and Correlation
The week-to-date correlations between the currencies point out some interesting observations. ETH-USD and BTC-USD have a high correlation (0.902803), which is not surprising considering their market dominance. Similarly, Ethereum Classic (ETC-USD) and Ethereum (ETH-USD) show a strong correlation (0.855246), given their common roots. On the other hand, TRON (TRX-USD), 0x (ZRX-USD), and Stellar Lumens (XLM-USD) are least correlated with other currencies, offering good diversification opportunities for investors who are looking to reduce their portfolio risk.
In summary, this week has been full of highs and lows for cryptocurrencies. While the market has seen some volatile movements, there are clear opportunities for investors looking for both growth and diversification.
Please note, this analysis is meant to provide an overview of the market conditions and is not investment advice. Always do your own research and consider your financial position before investing in cryptocurrencies.
<YBC Quant Team>