September 2020 – Market Commentary

The strong momentum from July and August faded as the digital asset markets experienced a sharp sell-off early in September. The BITX dropped 5.6% on 9/2 and continued to slide before bottoming on September 8th. The post-Labor Day correction impacted the full range of markets with strong August performers seeing the worst contractions including ETH which was down 30% over a 5-day period. The remainder of the month was choppy as the markets swung back and forth in a relatively tight range.

The U.S. election and other “macro” concerns dominate much of the industry discussions as of late. One week digital assets track precious metals, the next week they track U.S. equities, and then the following week they track the U.S. Dollar. Uncorrelated assets are exactly that, uncorrelated and short-term spurious co-movements just add to the noise. Ultimately, the direction of digital assets will be determined by capital flows in and out of the industry.