PUBLISHED Aug 15, 2022, 5:45:17 PM        SHARE

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Share Price: $11.43

52-Week Range: $8.02-$84.40

Volume: 90,390



Price Target: $2.96


The cryptocurrency market is a fast and advanced space. Analysts predict the space to grow to 1902.5 million in the year 2028. The market stood at just $826.6 million in 2020. The industry is expected to have a compound annual growth of about 11.1%. Cryptocurrency is a digital currency exchange that eliminates the necessary requirement for a financial middleman such as a bank. In the recent months, cryptocurrency has taken a hit. Bitcoin prices fell about 38% just in the month of June and ended with a value just under $20,000.. Ethereum prices fell by more than 42% month over month as they try to shift their platform to a more energy friendly platform. The total market capitalization of the international cryptocurrency market capitalization has hit a high of $3 trillion in November of 2021 but the recent hit has decreased the cap to around $866 billion.


The BitWise 10 Cypto index tracks the 10 most valued cryptocurrencies. They are chosen by their market risks, market capitalization, and rebalanced monthly. Examples of holdings in the index include Bitcoin, Ethereum, Cardano, Polkadot, Solana, Litecoin, and Uniswap.


Inflationary Pressures

As the consumer price index increases post pandemic, the us dollar index is expected to erode over time. As a way to hedge inflation, diversifying your portfolio through cryptocurrency is a great way to prevent a decrease in your assets. Analysts believe that cryptocurrency is a great investment against rising prices. However, the volatility and decline in crypto alongside inflation has begun to worry investors. When consumer prices increased in early 2021, Bitcoins value fell significantly and again towards the beginning of 2022, we saw another fall in the cryptocurrencies value. The rise in inflation has also hit the equity market and S&P 500 ended its worst first half of the year since 1970. Bitcoin is closely correlated with the movement of Nasdaq and other major indexes. Market experts indicated that the correlation between cryptocurrency and normal markets is at an all-time high. Experts have calculated the correlation among both to be around 0.82 which is significantly higher than previous correlation of around 0.5. Analysts predict that the direct relationship between tech stocks and cryptocurrencies is even stronger.

BITW chart

Regulations on the Rise

Ever since the launch of the space of digital currency, the government has grown speculative of its nature and has taken measures to add extra regulations. Cryptocurrency is vulnerable to ransomware attacks, market manipulation, and scams that could potentially lose companies and individuals millions of dollars. President Joe Biden has released a report asking Congressional leaders to build a support system around Stablecoins. Biden has asked for stablecoins such as the TerraUSD to be backed up and insured by financial institutions. However, regulations have not always been a great aspect of rising cryptocurrency as analysts see them as breaking into the freedom of the decentralizing blockchain. Recently, Senator Gillbrand and Senator Cynthia had layed out a plan regulate cryptocurrency. They have included tax requirements and have stricter rules on stable coins. The SEC has also not been a big fan of cryptocurrency as the chairman, Gary Gensler, has been a sharp critic for the technology citing its unreliability and abuse. An excess amount of regulation by the SEC and government would not pose well for cryptocurrency as investors will be disincentivized to invest in an asset when its main selling point is its freedom from institutions.


Increasing Popularity in the Metaverse:

Blockchain technology is the driver force behind the entire digital universe, the Metaverse. With blockchain finding its practical application in Bitcoin, the use of blockchain has took off, leading to the eventual creation of the Metaverse. With the universe growing and more coins being created that are based in the Metaverse itself, the popularity of altcoins is expected to rise. Although the holdings of the fund do not include coins based in the universe, the desire for altcoins should rise alongside the growth of the Metaverse. As altcoins take away market share from Bitcoin, the fund could grow with the growth and popularity of the Metaverse.

Crypto Market Cap

Expanding Capabilities of Blockchain:

Since the initial use of blockchain with Bitcoin, the capabilities have continued to be expanded upon. For example, other coins, like Cardano and Ethereum, have expanded their blockchain technology into some of the largest smart contract platforms. These platforms facilitate the use of smart contracts - computer programs that automatically execute events and actions according to a contract - with the hope of future applications in the quality control and governance of supply chain. These expansions are just the beginning of the capabilities of blockchain, leading to the potential of growth in the fund.


BITW Technical Chart

The Bitwise 10 Crypto Index Fund is currently displaying very weak technicals amidst the large scale sell-off of all cryptocurrencies. With further potential of more volatility in the markets, raging inflation leading to interest rate hikes, and increased chances of an economic slowdown, the Bitwise 10 Crypto Index Fund is a strong candidate for a short position. Currently, the Eagle Algorithm is displaying a bearish trend since the middle of April, which we expect to continue. With the Elliot Wave Oscillator consistently being in the red and Stochastics staying stagnant in the oversold territory, we are not confident in the growth potential of the Bitwise 10 Crypto Index Fund, leading to the proposal of a short position.

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