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Vibe Check: The Bullish Bounce Back: CoinDesk Indices' Todd Groth

Periodic observations and market musings from Todd Groth, Head of Research, CoinDesk Indices.

Updated Jan 31, 2024, 2:00 p.m. Published Jan 31, 2024, 2:00 p.m.

Bullish Bounce Back

We’ve bounced back having found support last week (see previous Vibe Check), with the CoinDesk 20 Index outperforming bitcoin (BTC) narrowly and ether (ETH) significantly.

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CoinDesk 20 Index outperforming BTC and ETH. (CoinDesk Indices)

So what’s providing the source for the dramatic bounce in the market? In addition to Bitcoin’s rebound, Solana's (SOL) 25% gain and Avalanche's (AVAX) 23% rise are providing some additional buoyancy to the broader market.

Constituent weights of CoinDesk 20. (CoinDesk Indices)

Over the past month, we’re seen a noticeable drop in correlations (daily returns) within the digital asset market, with BTC versus ETH correlations dropping, altcoins to CoinDesk 20 rising, and crypto vs equity market correlations flipping positively.

A noticeable drop in correlations in the digital assets markets. (CoinDesk Indices)

Much stronger correlations now observed between US 10-yr yield changes and risk assets such as crypto and equity markets, as when and how much rates are cut in the future seems to be the predominant question being debated within markets.

Channel check on Bitcoin. (CoinDesk Indices)

Need more color on what's happening in the markets? Check out these stories:

Ether Could Hit $4,000 With Likely Spot ETH ETF Approval in May: Standard Chartered: The British bank expects the SEC will treat spot ether ETF applications similarly to bitcoin ETFs and anticipates approvals on May 23.
Bitcoin Price Nears $44K as ETFs See Net Inflows for First Time in a Week: The last previous net inflow day was January 22, when the spot products as a group added just over 1,200 bitcoin.
SOL, AVAX Lead Crypto-Market Recovery, Bitcoin Tops 50-Day Average Before Fed Meeting: Altcoins' consistent positive performance over the past six days is boosting optimism and setting up bitcoin to test $46,000, one analyst said.
Bitcoin ETF Has Broken BTC's Pandemic-Era Price Correlation With Luxury Watches: Crypto prices have decoupled from prices for luxury watches, ending a prolonged positive correlation caused by unprecedented monetary stimulus.

Analysts Analysis Markets

Todd Groth

Todd Groth was the Head of Index Research at CoinDesk Indices. He has over 10 years of experience involving systematic multi-asset risk premia and alternative investment strategies. Before joining CoinDesk Indices, Todd served as Head of Factor Insights at Premialab, an institutional fintech analytics company, and as a Managing Director at Risk Premium Investments (RPI), a systematic multi-asset asset manager. Before RPI, Todd was a Quantitative Portfolio Manager at Investcorp and began his finance career at PAAMCO, a fund of hedge funds, as a manager within the risk analytics group. Todd holds a BS in Mechanical Engineering from the University of California, San Diego, an MS in Mechanical Engineering from the University of California, Los Angeles, and a Master of Financial Engineering from UCLA Anderson School of Management. Todd holds BTC and ETH above CoinDesk’s disclosure threshold of $1,000.