Blink And You’ll Miss It

There’s a famous British saying “if you don’t like the weather, just wait five minutes” – we couldn’t find another quote that better fits the past 24 hours in crypto. Bitcoin has gone through the equivalent of all four seasons in a single day. 

The rollercoaster ride began on Saturday with President Trump’s official launch of the $TRUMP memecoin token. The token was initially priced at $0.18 on Moonpay (an app / marketplace where traders can purchase memecoins at launch), before reaching an ATH of $73.43 late on Sunday evening. President Trump’s choice of launching his token on Solana over alternative blockchains, namely Ethereum, resulted in a surge of on-chain activity on Solana as traders rushed to its DEXs such as Raydium, Jupiter and Meteora to capture the potential gains. 

The result was the total daily volume on Solana DEXs exceeding $27.9B on Sunday, a record high across any DeFi ecosystem (including Ethereum). This figure also exceeded the total daily volume across all other networks, with Ethereum DEXs registering less than 1/5th of that ($5B in volume), according to data from DefiLlama. 

At the same time, Solana reached a new all-time high, upwards of $294 per SOL token. Beyond the hype around the crazy valuations and trade volume that President Trump’s memecoin launch has generated, the rally in Trump’s token suggests some evidence that retail is a smaller driving force in this current cycle compared to those before it. Whilst TRUMP, SOL and the tokens that represent its DEXs (JUP, RAY) were up, the rest of the market was considerably down (BTC was sideways, ETH was trading slightly lower). See that in the bubble chart below captured yesterday at 14:00 UTC. 

In particular, many memecoins — including those that were part of the memecoin mania in March 2024 — posted double-digit losses yesterday (DOGE, POPCAT, WIF, SPX). What that could suggest is that not much new capital came into the market to push Trump’s coin up – that the liquidity was likely provided by traders selling existing altcoin holdings and rotating into Trump’s token. This could also offer some explanation as to why memecoins suffered the largest losses – those traders are likely the majority holders of Trump’s meme token too. 

An incoming U.S. president launching his memecoin would have been enough for one weekend, but it didn’t end there. Incoming First Lady, Melania Trump, then took to X late last night to launch her very own meme token too. Almost instantly, $TRUMP crashed by over 40% as traders seemingly aggressively rushed to buy the $MELANIA token – some more evidence that the same capital was being rotated around from token to token. This frenzy from both Trump tokens resulted in such heavy on-chain volume on Solana, that the network partially crashed. Transaction failure rates doubled from just under 20% to 43% within an hour of Melania’s launch. As a result of that instability and uncertainty, Solana fell from its high down to $232, which also coincided with a flash crash in Bitcoin’s price that saw it briefly trade below $100K. 

As more and more traders rushed to purchase the MELANIA token, USDT temporarily traded at a discount to USDC on Solana, following a huge demand for SOL and USDC in order to swap into MELANIA. The result? Some traders on X were briefly making 15-40% simply swapping between both the USDC and USDT tokens. 

BTC did not stay sub-100K for long, however. Ahead of Trump’s inauguration speech, during Asian trading hours, it made a new ATH to $109K. This rally was driven by speculation that Mr Trump will sign over 100 executive orders which could include some crypto policies, as well as the Polymarket implied odds of a Strategic Bitcoin Reserve (SBR) spiking from 33% to 59%.

Sentiment for BTC has subsequently moved into extreme positivity. For the first time during the New Year, our Senti-Meter index has risen above a value of 2, signalling that sentiment is more than two standard deviations greater than its average over the past 30 days, firmly in the zone of ‘euphoria’.

Funding rates for BTC now exceed 0.07% every 8 hours, their highest since early December last year, and short-term futures yields are at 30%. 

The BITCOIN Act by Senator Lummis is one proposal for a SBR, outlining the U.S. government to purchase 1 million bitcoins over a 5 year period. This would be funded partially by re-valuing the Treasury’s gold certificates that are still valued at their 1973 fixed price and changing the rules on the Fed’s surplus funds in order to transfer more profits to the Treasury. We do note that for this particular implementation of the SBR to be possible, Congress would have to vote on amending both the Gold Reserve Act and the Federal Reserve Act – a fair share of challenges.

While BTC sentiment has rallied, ETH derivatives markets are showing a less bullish stance at shorter tenors, though are still positive for longer tenors. ETH vol smiles are not unanimously skewed across the term structure towards calls as strongly and consistently as they are for BTC, and traders are not expressing the same expression for leveraged long exposure. For example, at 30-day tenors, BTC’s put-call skew is nearly 6% in favour of calls, compared to ETH skew which is 3%.

Equally, our ETH Senti-Index is not at the same exuberance levels as we saw in the immediate post-election period and is significantly lower than BTC’s current sentiment. In a bid to perhaps change that sentiment, Ethereum co-founder Vitalik Buterin recently announced a rehaul to the Ethereum Foundation’s leadership aiming to attract more dApps to the Ethereum ecosystem.