Crypto Markets Daily Dec 2 2024

Jobs Week

Starting with Macro. It’s an important week for jobs data in the U.S. – JOLTS is released on Wednesday and NFP on Friday. The latter is expected to show 200,000 new jobs created in November, bringing the 3-month moving average for job growth to 145,000 after the October figure of 12,000 jobs added (lower than usual due to hurricanes and strikes) brought the average down to 104,000.

Barring that October non-report, jobs data has so far shown what the Fed has been looking for: a jobs market that is “cooling but not deteriorating”. Friday’s incoming NFP report will be crucial for the Fed in determining the December meeting outcome, given that inflation is still (still) sticky (core PCE above target at 2.8%) and hasn’t given the committee total free reign just yet. Currently, interest-rate swaps imply a 65% chance of a cut in December.

Interspersed between data releases we also expect to hear from several FOMC members in speeches this week: Waller Monday evening, Kugler Tuesday, the Chair himself on Wednesday, and Bowman on Thursday. This will be a great chance to get further insight to their thinking ahead of their meeting two weeks from Wednesday.

In Crypto. Ethereum Spot ETFs saw their highest net inflows since launch ($332.9M) on Friday 29 Nov, equivalent to nearly 0.1% of ETH’s total market cap and over $30M greater than the previous high on Nov 11. This follows a week of outperformance by ETH and suggests increased institutional interest in the rotation of capital into altcoins – particularly given the fact that this was the first time ETH inflows were greater than their BTC counterpart when BTC inflows were also positive. It’s also a big point in favour of the rotation into the ETH ETF basis trade that we speculated on in our Nov 27, 2024 comment.

Bitcoin dominance is now around 55.7% (according to CMC), a level last seen in September of this year, as ETH is not the only one to outperform. Another altcoin enjoying the current surge is XRP which overtook Solana and USDT on the weekend to become the 3rd largest Cryptocurrency by market cap. Part of this rally can be attributed to a Fox Business article that indicated that New York Department of Financial Services are reportedly very close to approving a stablecoin pegged to the dollar issued by Ripple Labs, RLUSD.

In derivatives. BTC’s skew levels have returned to strong positive levels all across the term structure, showing that traders are willing to get exposure to upward price movements at a premium.

ETH’s dominance in derivatives market sentiment is still resilient – perps showing overall stronger funding rates over the weekend, spot yields are higher, and volatility smile skew remains towards OTM calls.

However, BTC has returned to a similarly bullish skew across the term structure.

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