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10 Jan 2025|RESEARCH

Alpha Navigator: Quest for Alpha [December 2024]

Most assets saw a decline in December, with ETH leading the drop. On a yearly basis, crypto led the rise, with BTC and ETH increasing 77% and 37%, respectively. US, Eurozone, and Canada reduced interest rates; UK, Australia, China, and Japan kept rates unchanged.

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Executive Summary

  • Most assets saw a decline in December, with ETH leading the drop. On a yearly basis, crypto led the rise, with BTC and ETH increasing 77% and 37%, respectively.
  • US Fed projected two 0.25% interest rate cuts this year in the recent December meeting, down from four in September. In 2025, the Fed expects real GDP growth to be 2.1% (vs 2% projected in September 2024) and inflation to stay at an average of 2.5% (vs 2.1%). China eased its monetary policy stance in December, embracing a “moderately loose” policy instead of a “prudent” one, potentially suggesting a greater willingness to pledge stimulus measures and cut interest rates.  
  • Key macro events in January include interest rate decisions from the US, Eurozone, Canada, China, and Japan
  • BTC’s performance correlation with Equities increased in December and turned positive with Fixed Income (negative in November).
  • US spot Bitcoin ETFs saw their tenth month of net inflows in 2024, totaling $35 billion for the year. The ETFs experienced $4.6 billion in net inflows in December, lower than the $6.5 billion in November.
  • Market-Neutral Pair Trader hunts for strongly correlated tokens and potential market-neutral pair trades. ARB/OP and ATOM/DOT showed the strongest price correlation (both at 0.84), followed by DOT/POL (0.83), ADA/DOT (0.81), and ARB/ETH (0.80).
  • For the BTC vs. ETH pair, the price ratio (BTC price divided by ETH price) increased toward the 2-standard deviation (SD) in late-December.
  • Our style-factor screens track momentum, value, growth, and risk for the Layer-1 and Layer-2, DeFi, Gaming, and NFT categories. Below is the screen for selected top crypto tokens by market cap in the Layer-1 and Layer-2 category. Most L1 and L2 tokens saw negative price movements in December. NEAR (-28.3%) and ATOM (-26.4%) saw the biggest monthly losses.
  • Our events section shows recent and upcoming events for selected tokens, as well as important macroeconomic events.
Token7D Price Change1M Price ChangeEvents
Bitcoin (BTC)+2.3%-3.4%US spot bitcoin ETFs saw a monthly net inflow of $4.6 billion in December, totalling $35 billion in 2024. Bitcoin reached a new all-time high above $108,000 on 17 December.
Ether (ETH)+0.4%-14.4%US spot ether ETFs recorded their highest monthly net inflow of $2.1 billion in December, totalling $2.7 billion in 2024.
Cronos (CRO)+1.5%-24.8%Cronos EVM completed the Pallene upgrade on 12 December, which introduced parallel transaction processing and optimistic execution to deliver a transaction processing capacity that is 600 times faster at up to 60,000 TPS. 
Ripple (XRP)+7.0%-6.9%Ripple launched its USD stablecoin, Ripple USD (RLUSD), on global exchanges on 17 December. It’s available on Uphold, Bitso, and MoonPay, among others, with plans to expand to more platforms soon. 
Avalanche (AVAX)+7.7%-25.7%Avalanche9000 (Etna upgrade) went live on mainnet on 17 December. It is expected to lower the cost of deploying an L1 by 99.9% and reduce the minimum gas fee on the C-chain by 96%. Avalanche also announced a $250 million private-locked token sale led by Galaxy Digital, Dragonfly, and ParaFi Capital. 
Polygon Ecosystem Token (POL)+1.8%-31.4%Agglayer v0.2 testnet went live on 20 December with the mainnet expected in early 2025. v0.2 introduces the implementation of pessimistic proofs, and aims to unify EVM chains through the Agglayer. 
As of 8 Jan 2025 Sources: Crypto.com Research, CoinGecko

Read the full Alpha Navigator report: Alpha Navigator: Quest for Alpha [December 2024]

Author

Research & Insights Team

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