Ben Strack


<p>MSCI is bringing to market four digital asset indexes and has partnered with Goldman Sachs and Coin Metrics to create a classification system for the nascent space.</p>



<p>The New York-based company is set to offer two indexes that seek to capture the performance of the top 20 or top 30 digital assets by market capitalization, respectively, excluding stablecoins.&nbsp;</p>



<p>It also revealed the launch of a digital assets index excluding tokens that rely on a proof-of-work consensus mechanism, such as bitcoin.&nbsp;</p>



<p>The Ethereum blockchain <a href="https://cms.blockworks.co/ethereum-switches-to-proof-of-stake-after-7-years-of-work/" target="_blank" rel="noreferrer noopener">transitioned from proof-of-work to proof-of-stake</a> in September. <a href="https://cms.blockworks.co/fixed-income-hungry-institutions-next-play-is-likely-ether/" target="_blank" rel="noreferrer noopener">Industry watchers told Blockworks</a> that the staking yields investors can now earn from ether is poised to attract institutions.</p>



<p><strong>Read more: </strong><a href="https://cms.blockworks.co/proof-of-work-vs-proof-of-stake-whats-the-difference/" target="_blank" rel="noreferrer noopener">Proof-of-Work vs. Proof-of-Stake: What’s the Difference?</a></p>



<p>A fourth index targets digital assets associated with smart contracts platforms.&nbsp;</p>



<p>“The digital assets ecosystem is evolving rapidly along with investor demand for tools and solutions to help navigate this new asset class,” Stephane Mattatia, MSCI’s head of thematic indexes, said in a statement.&nbsp;</p>



<p>“Global investors are looking for greater transparency and insight into these markets and how best to participate in them in a manner that meets their high standards for professionalism, scale, risk management, and security.”</p>



<h3 class="wp-block-heading"><strong>Banks pay more attention to crypto as institutional interest rises</strong></h3>



<p>The launches come the same day that MSCI revealed datonomy, a data service it created with Goldman Sachs and Coin Metrics that classifies coins and tokens based on how they are used.</p>



<p>MSCI is the owner and sole administrator of this new classification system. Goldman Sachs and Coin Metrics are the initial datonomy advisory board members, while other members will be revealed later on, according to MSCI.</p>



<p><a href="https://developer.gs.com/discover/datonomy" target="_blank" rel="noreferrer noopener">The classification system</a> breaks the digital assets into categories, such as value transfer coins and specialized coins — the latter consisting of meme coins, privacy coins and remittance coins. It also includes sub-categories within larger segments including blockchain infrastructure, digital asset applications and on-chain derivatives.&nbsp;&nbsp;</p>



<p>Anne Marie Darling, head of Marquee client strategy and distribution at Goldman Sachs, said in a statement that the collaboration brings together MSCI’s support tools, Coin Metrics’ crypto expertise and Goldman Sachs’ traditional finance experience.</p>



<p>Banks are getting more involved in crypto and blockchain in recent months, despite the continued crypto drawdown and broader bear market.&nbsp;</p>



<p>Goldman Sachs facilitated <a href="https://cms.blockworks.co/goldman-sachs-makes-milestone-crypto-trade-with-galaxy-digital/" target="_blank" rel="noreferrer noopener">its first over-the-counter (OTC) crypto transaction</a> with Galaxy Digital in the form of a bitcoin non-deliverable option, the bank revealed in March.</p>



<p><a href="https://cms.blockworks.co/bny-mellon-moves-to-let-institutions-hold-bitcoin-ether/" target="_blank" rel="noreferrer noopener">BNY Mellon launched a crypto custody platform</a> in the US for certain institutional clients to hold and transfer bitcoin and ether.</p>



<p>JPMorgan this week <a href="https://cms.blockworks.co/jpmorgan-trade-on-public-blockchain-monumental-step-for-defi/" target="_blank" rel="noreferrer noopener">used the Polygon blockchain to trade</a> tokenized cash deposits.This shift comes as <a href="https://cms.blockworks.co/74-of-institutions-plan-to-buy-crypto-fidelity-survey/" target="_blank" rel="noreferrer noopener">a survey</a> by Fidelity Digital Assets found that 58% of surveyed institutional investors reported owning digital assets in the first half of 2022 — a 6% year-over-year increase. Of the more than 1,000 respondents, 74% said they plan on buying digital assets in the future.&nbsp;</p>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<p><strong>Get the news in your inbox. Explore Blockworks newsletters:</strong></p>



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown"><strong>The Breakdown</strong></a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch"><strong>0xResearch</strong></a>: Alpha in your inbox. Think like an analyst. </li>
</ul>


Coin Metrics

MSCI Enlists Goldman Sachs To Organize Crypto Market Chaos

Sam Martin

<div id="highlights-block_1de725d7417625c4c6cf81b9be52b950" class="highlights">
        <ul>
                <li>Bitcoin has seen a lot of ups and downs over the course of 2021</li>
                <li>A BTC short squeeze could be brewing</li>
            </ul>
    
</div>



<p>Coin Metrics released a <a href="https://coinmetrics.substack.com/p/state-of-the-network-issue-134" target="_blank" rel="noreferrer noopener">report</a> highlighting some BTC moments from 2021.</p>



<p>BTC wallets holding non-zero balances continue to notch new highs.</p>



<p>Bitcoin could be setting up for a short-squeeze as stablecoin-margined open interest rises.</p>



<p>Tether and USDC grew from a combined market cap in 2020 of $25 billion to a combined market cap of $117 billion in 2021, according to the Coin Metrics <a href="https://coinmetrics.substack.com/p/state-of-the-network-issue-134" target="_blank" rel="noreferrer noopener">report</a>.</p>



<h3 class="wp-block-heading"><strong>Latest in Macro:</strong></h3>



<ul class="wp-block-list">
<li>S&amp;P 500: 4,649, +1.78%</li>



<li>NASDAQ: 15,341, +2.40%</li>



<li>Gold: $1,789, -0.18%</li>



<li>WTI Crude Oil: $71.47, +4.17%</li>



<li>10-Year Treasury: 1.470%, +0.053%</li>
</ul>



<h3 class="wp-block-heading"><strong>Latest in Crypto:</strong></h3>



<ul class="wp-block-list">
<li>BTC: $48,667, +2.60%</li>



<li>ETH: $4,017, +1.30%</li>



<li>ETH/BTC: 0.0824, -2.17%</li>



<li>BTC.D: 40.63%, +0.54%</li>
</ul>



<h3 class="wp-block-heading">BTC 2021</h3>



<p>BTC opened the year strong with a Q1 rally up to <a href="https://coinmarketcap.com/currencies/bitcoin/" target="_blank" rel="noreferrer noopener">$57,500</a> ignited by Tesla&#8217;s <a href="https://coinmetrics.substack.com/p/coin-metrics-state-of-the-network-330" target="_blank" rel="noreferrer noopener">announcement</a> on Feb. 8, 2021, that they had added $1.5 billion worth of BTC to their balance sheet. </p>



<p>Tesla&#8217;s announcement coincided with an increase in the number of wallet addresses with a non-zero balance, according to data from <a href="https://studio.glassnode.com/metrics?a=BTC&amp;category=Distribution&amp;m=addresses.NonZeroCount&amp;modal=loginForm&amp;s=1572363587&amp;u=1640044800&amp;zoom=" target="_blank" rel="noreferrer noopener">Glassnode</a>. As seen in the chart below, the number of people who own BTC is at an all-time high.</p>


<div class="wp-block-image">
<figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="576" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-number-of-addresses-with-a-non-zero-balance-1024x576.png" alt="" class="wp-image-13002" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-number-of-addresses-with-a-non-zero-balance-1024x576.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-number-of-addresses-with-a-non-zero-balance-1024x576.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-number-of-addresses-with-a-non-zero-balance-1024x576.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-number-of-addresses-with-a-non-zero-balance-1024x576.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-number-of-addresses-with-a-non-zero-balance-1024x576.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-number-of-addresses-with-a-non-zero-balance-1024x576.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-number-of-addresses-with-a-non-zero-balance-1024x576.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-number-of-addresses-with-a-non-zero-balance-1024x576.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/glassnode-studio_bitcoin-number-of-addresses-with-a-non-zero-balance-1024x576.png?w=1800 1800w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Source: Glassnode</figcaption></figure></div>


<p>BTC then marched on in Q2 of 2021 as Coinbase, the most widely used exchange in the US to purchase digital assets, <a href="https://news.bitcoin.com/coinbase-ipo-april-14-nasdaq/" target="_blank" rel="noreferrer noopener">went public</a> on April 14. The anticipation of the event led to a rally above $63,000 before breaking trend and retracing below $50,000 in the following weeks.</p>



<p>However, the big decline did not occur until China <a href="https://medium.com/coinmetrics/bitcoin-miners-are-escaping-china-d3937e8f018c" target="_blank" rel="noreferrer noopener">announced</a> it would ban bitcoin mining at the end of May. </p>



<p>&#8220;The Chinese government announced a regulatory crackdown of Bitcoin mining and trading. Although China has &#8216;banned&#8217; Bitcoin several times in the past, this time was different:&nbsp;<a href="https://medium.com/coinmetrics/bitcoin-miners-are-escaping-china-d3937e8f018c" target="_blank" rel="noreferrer noopener">Chinese Bitcoin miners started to shut down</a>&nbsp;and rapidly leave the country in anticipation of regulatory action. The amount of BTC transferred by miners hit a yearly high as some miners moved to sell their holdings and move out of the country.&#8221; reads a <a href="https://coinmetrics.substack.com/p/state-of-the-network-issue-134" target="_blank" rel="noreferrer noopener">Coin Metrics report</a>.</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="702" height="407" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.16.03-PM.png" alt="" class="wp-image-13004" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.16.03-PM.png?w=702 702w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.16.03-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.16.03-PM.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.16.03-PM.png?w=450 450w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.16.03-PM.png?w=378 378w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.16.03-PM.png?w=80 80w" sizes="auto, (max-width: 702px) 100vw, 702px" /><figcaption class="wp-element-caption">Source: Coin Metrics</figcaption></figure></div>


<p>Between the mining ban and a highly leveraged market structure, a lot of traders were forced to close their long positions which helped push the price below $<a href="https://coinmarketcap.com/currencies/bitcoin/" target="_blank" rel="noreferrer noopener">35,000</a>.</p>



<p>Futures open interest dropped from $20.73 billion on May 10 to $10.93 billion on May 23, according to data from <a href="https://www.coinglass.com/BitcoinOpenInterest" target="_blank" rel="noreferrer noopener">Coinglass</a>.</p>


<div class="wp-block-image">
<figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="382" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/bybt_chart-6-4-1024x382.png" alt="" class="wp-image-13005" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/bybt_chart-6-4-1024x382.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/bybt_chart-6-4-1024x382.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/bybt_chart-6-4-1024x382.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/bybt_chart-6-4-1024x382.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/bybt_chart-6-4-1024x382.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/bybt_chart-6-4-1024x382.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/bybt_chart-6-4-1024x382.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/bybt_chart-6-4-1024x382.png?w=1340 1340w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Source: Coinglass</figcaption></figure></div>


<p>After a long chop sideways in Q3, the launch of a US-based bitcoin futures backed ETF product in <a href="https://cms.blockworks.co/first-bitcoin-strategy-etf-puts-btc-in-overdrive-price-tops-64k-markets-wrap/" target="_blank" rel="noreferrer noopener">October</a> sparked another rally to fresh all-time highs.</p>



<p>The <a href="https://coinmetrics.substack.com/p/state-of-the-network-issue-134" target="_blank" rel="noreferrer noopener">Coin Metrics report</a> continues: &#8220;By October 19th BTC price topped $64K, surpassing Q2’s top and setting a new all-time high. Q4 also ushered in Bitcoin’s biggest upgrade in four years: Taproot. Taproot introduced new scripting possibilities and laid the foundation for new smart contract functionality, while improving Bitcoin’s security and privacy. So far, about&nbsp;<a href="https://txstats.com/dashboard/db/taproot-statistics?orgId=1&amp;from=now-30d&amp;to=now">1.6K BTC has been stored in Taproot P2TR outputs</a>&#8220;.  </p>



<h3 class="wp-block-heading">Bitcoin today</h3>



<p>BTC was last trading near $48,650, up ~5.20% on the day, according to data from <a href="https://www.coingecko.com/en" target="_blank" rel="noreferrer noopener">Coingecko</a>. Some traders are pointing to the possibility of a short squeeze on the heels of <a href="https://app.laevitas.ch/dashboard" target="_blank" rel="noreferrer noopener">mixed perpetual funding</a> rates and rising stablecoin-margined open interest when compared to flat coin-margined open interest.</p>



<p>@bit_hedge noted on <a href="https://twitter.com/bit_hedge/status/1473268340445618180?s=20" target="_blank" rel="noreferrer noopener">Twitter</a>, &#8220;We&#8217;ve seen this picture before,&#8221; alluding to a similar setup today as the beginning of the end-of-summer rally seen earlier this year. </p>


<div class="wp-block-image">
<figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="576" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@bit_hedge-1024x576.png" alt="" class="wp-image-13008" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@bit_hedge-1024x576.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@bit_hedge-1024x576.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@bit_hedge-1024x576.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@bit_hedge-1024x576.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@bit_hedge-1024x576.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@bit_hedge-1024x576.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@bit_hedge-1024x576.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@bit_hedge-1024x576.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/@bit_hedge-1024x576.png?w=1920 1920w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Source: @bit_hedge</figcaption></figure></div>


<h3 class="wp-block-heading">Other key metrics from 2021</h3>



<p>On-chain highlights for BTC, ETH, Tether and USDC over the course of 2021 can be found in the table below:</p>


<div class="wp-block-image">
<figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="670" height="467" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.42.50-PM.png" alt="" class="wp-image-13009" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.42.50-PM.png?w=670 670w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.42.50-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.42.50-PM.png?w=369 369w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.42.50-PM.png?w=374 374w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.42.50-PM.png?w=314 314w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-12.42.50-PM.png?w=80 80w" sizes="auto, (max-width: 670px) 100vw, 670px" /><figcaption class="wp-element-caption">Source: Coin Metrics </figcaption></figure></div>


<h3 class="wp-block-heading">Non-Fungible Tokens (NFTs)</h3>



<p>Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found below:</p>


<div class="wp-block-image">
<figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="337" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.43.50-PM-1024x337.png" alt="" class="wp-image-13014" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.43.50-PM-1024x337.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.43.50-PM-1024x337.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.43.50-PM-1024x337.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.43.50-PM-1024x337.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.43.50-PM-1024x337.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.43.50-PM-1024x337.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.43.50-PM-1024x337.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.43.50-PM-1024x337.png?w=1224 1224w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Top Ethereum Projects</figcaption></figure></div>

<div class="wp-block-image">
<figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="280" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.44.04-PM-1024x280.png" alt="" class="wp-image-13015" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.44.04-PM-1024x280.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.44.04-PM-1024x280.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.44.04-PM-1024x280.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.44.04-PM-1024x280.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.44.04-PM-1024x280.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.44.04-PM-1024x280.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.44.04-PM-1024x280.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/Screen-Shot-2021-12-21-at-2.44.04-PM-1024x280.png?w=1196 1196w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Top Solana Projects </figcaption></figure></div>


<p>If you made it this far, thanks for reading! I am looking forward to catching up tomorrow.</p>



<hr class="wp-block-separator has-css-opacity"/>



<p><strong>Get the day’s top crypto news and insights delivered to your inbox every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.</strong></p>



<hr class="wp-block-separator has-css-opacity"/>


Coin Metrics

Newsletter

Blockworks Research