YESTERDAY|RESEARCH

Alpha Navigator: Quest for Alpha [February 2025]

Asset performance was mixed. Crypto and Equities led the drop, while Real Assets and Fixed Income increased. Eurozone, Australia, and New Zealand cut interest rates; China kept rates unchanged.

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Executive Summary

Asset performance was mixed. Crypto and Equities led the drop, while Real Assets and Fixed Income increased.

US Federal Open Market Committee Minutes suggested upside risks to the inflation outlook, which coincided with potential changes in trade and immigration policy. Fed members want to see further progress on inflation before adjusting interest rates. US President Donald Trump announced multiple tariff updates, including plans to impose a 25% tariff on imports from the European Union and tariffs on imports from Canada, Mexico, and China to come into effect on 4 March.

Key macro events in March include interest rate decisions from US, UK, Canada, China, and Japan.

BTC’s 1-month performance correlation with Equities and Gold increased.

US spot BTC ETFs saw $3.5 billion in net outflows in February; the majority of outflows ($3.2 billion) happened in the latter half of the month. This coincided with Trump announcing tariff updates and cryptocurrency exchange Bybit facing a hack of over $1.4 billion.

Market-Neutral Pair Trader hunts for strongly correlated tokens and potential market-neutral pair trades. ARB/OP (0.87) showed the strongest price correlation, followed by DOT/POL (0.85) and DOT/ATOM (0.85).

For the BTC vs. ETH pair, the price ratio (BTC price divided by ETH price) maintained the 2-standard deviation (SD) in February.

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. L1 and L2 tokens all dropped; CRO (-41.9%) and SOL (-39.4%) led the decrease.

Our events section shows recent and upcoming events for selected tokens, as well as important macroeconomic events.

Token	7D Price Change	1M Price Change	Events
Bitcoin (BTC)	+7.5%	-6.1%	US spot BTC ETFs saw $3.5 billion in net outflows in February. Bitcoin dominance reached 62% on 25 February, the highest level since February 2021, according to CoinGecko.
Ether (ETH)	-2.4%	-16.0%	US spot ether ETFs recorded a monthly net inflow of $60 million in February. Ethereum’s Pectra upgrade was activated on the Holesky testnet (but experienced issues with finality) and Sepolia testnet. In addition, the Ethereum Foundation announced a new leadership structure, welcoming Hsiao-Wei Wang and Tomasz Stańczak as co-Executive Directors, effective 17 March.
Cronos (CRO)	+24.8%	-11.0%	Cronos partnered with Crypto.com to launch an industry-first service enabling users to withdraw funds to a personal prepaid card. In addition, Cronos proposed the creation of a Cronos Strategic Reserve, where 70 billion CRO will be re-issued (reversal of the token burn in February 2021) into an escrow wallet subject to a new 5-year lockup on top of the 5-year lockup that has already passed since CRO’s original issuance on Ethereum. Voting of this proposal is from 3 to 17 March.
Uniswap (UNI)	-7.6%	-17.9%	Unichain mainnet went live on 11 February. It boasts 1-second block times and gas costs that are around 95% cheaper than Ethereum Layer-1s (L1s). Unichain is designed for DeFi and is expected to support native interoperability in the future.
Hyperliquid (HYPE)	-25.1%	-38.7%	Hyperliquid announced the mainnet launch of HyperEVM, which is built as part of the existing L1 and inherits security from HyperBFT consensus. It enables spot transfers between native spot HYPE and HyperEVM HYPE, and gas on HyperEVM will be paid with HYPE.
Ondo Finance (ONDO)	+18.7%	-14.3%	The Ondo team introduced Ondo Chain, an L1 Proof of Stake blockchain to “accelerate creation of institutional-grade financial markets on-chain”. It will support tokenised real-world assets (RWA), including Ondo Global Markets-issued tokens.