Crypto Markets Daily Dec 4 2024

JOLTS Cooling, Crypto Heating

Yesterday’s stronger-than-expected JOLTS report and trio of Fed speakers (who mainly used FOMC’s boilerplate language on monetary policy) proved not to be enough to move macro markets – we suspect this is likely due to traders awaiting Friday’s NFP for further clarity on the jobs market. 

Zooming slightly deeper into the JOLTs report (which is lagged by 2 months), the number of job openings for October, which measures open but unfilled jobs, increased to 7.74M, above expectations of 7.52M. The hiring rate did slip lower, but the quits rate is at its highest levels since May – indicating greater confidence in finding higher paying jobs. The JOLTS report on the whole strongly supports arguments for a labour market that is not overheating, nor deteriorating – but rather cooling to normalisation. 

This is also more-or-less the language used by the three Fed speakers of yesterday who, unlike Governor Waller, fell short of explicitly providing their view on the prospects of a December cut.  Chicago President Goolsbee expects rates “to come down a fair amount” over the next year, a message also echoed by Governor Kugler with the disclaimer that “policy is not on a preset course” and decisions will be taken “meeting by meeting". 

Whilst hitting the brakes may well turn out to be an option for the Fed either in December or January (markets think the latter), altcoins are showing no signs of slowing down on the back of further favourable news on Trump’s administration picks. Reserve Rights Token, RSR, has surged over 125% in the past week – largely driven by news that Paul Atkins, previously an advisor for Reserve Rights Foundation, the entity behind the RSR token, is the top candidate for the position of SEC Chair. Atkins was a former commissioner at the SEC known for his stance against heavy regulation both for crypto and traditional assets, but is yet to formally announce anything.

Tezos, a layer-1 blockchain which is up 34% on the week, announced plans to soon make Uranium trading possible through Uranium.io, adding to the extensive adoption of RWAs on-chain. Another leader in the RWA space, Ondo Finance, is up 70% this week. 

If any crypto is lagging, it’s Bitcoin. At-the-money implied vol for BTC has been trending downwards at short tenors, steepening its term structure significantly as price continues to move sideways between $95K and $100K levels, (see this in the chart below).

‍Sideways action and failure to breach the $100k psychological wall is not stopping institutional interest however – the BTC Spot ETFs continued the pickup from a relatively barren last week with inflows of $676.0M on Dec 3, bringing this week's total to $1.35B. After subdued inflows by the ETH Spot ETFs on Monday, inflows have also picked up for Ethereum, which netted $132.6M yesterday. 

ETH’s surging ETF inflows continue to match derivatives market sentiment. As you will see below, ETH’s short tenor skew has risen tremendously. Tenors of 7 days have skewed as much as 10% in favour of calls, indicating that market players are seeking continued upward exposure through option contracts – a fact that matches the sentiment we see expressed in the futures and perpetual markets of all crypto-currencies.