June 2021 – Market Commentary

The month of June saw a large divergence between large-cap markets and mid-to-small cap markets as BTC and ETH spent the majority of the month consolidating in the low $30ks and $2ks, re-spectively. While BTC and ETH were down 6% and 16%, the majority of other cryptocurrencies saw more substantial declines ranging from 25% to 50%+ (LINK down 40% and UNI down 33%).

Towards the end of May and the beginning of June, news started to emerge on Western media that the Chinese government’s regulatory crackdown on cryptocurrencies was not just exaggerated misconceptions or “FUD” (Fear Uncertainty & Doubt) to be dismissed. Rather, mining operations within its borders were being shut down and access to various liquidity venues and derivatives platforms was being throttled. Ex-post the flows that broke the euphoria now seem obvious but were much less so at the time it mattered.

The recent events of May and June serve as a great example of how the global market structure of this asset class creates an environment of perpetual uncertainty.