Crypto Markets Daily Nov 15 2024

ETH gave up almost all of its post-election gains against BTC even before the turn in the market, returning to trend since Nov 9. ETH has temporarily bucked its trend of underperformance against BTC several times in 2024, spiking higher following news of both BTC’s and ETH’s spot ETF launches. So far each catalyst has been just that – temporary. BTC pulled back 1.5% following Chair Powell’s speech, in line with the pullback of 0.6% in the S&P 500 – the two risk-on assets have increased their correlation since the election. Now that the election event risk is over we are watching the pace of rate cuts and health of the U.S. economy again as a potential driver of price action in what remains of 2024.

Crypto

Derivatives

DeFi

Macro

Ethereum Gives Up Gains

A higher than expected PPI release along with Chair Powell’s hawkish comments (“economy is not sending any signals that we need to be in a hurry to lower rates”) has brought expectations of a December rate cut back down once again. The market implied probability of a 25 bps cut in the final FOMC meeting of the year fell from 82.5% on 13 Nov, 2024 to 62.6% currently.

BTC pulled back 1.5% following Chair Powell’s speech, in line with the pullback of 0.6% in the S&P 500 – the two risk-on assets have increased their correlation since the election. Now that the election event risk is over we are watching the pace of rate cuts and health of the U.S. economy again as a potential driver of price action in what remains of 2024.

Altcoins followed BTC downward to trade lower compared to yesterday – notable exceptions include memecoins and XRP, which currently trades 12% up. This follows Gary Gensler signalling a potential step down in his role as Chair of the SEC. Ripple Labs, the developers of the XRP token, have been in an ongoing legal battle against the SEC since December 2020, and could benefit from a more crypto-friendly Chair.

BlackRock plans to expand their offering of real-world asset tokenisation, announcing the future availability of its Blackrock USD Institutional Digital Liquidity Fund (BUIDL) on five extra blockchains: Aptos, Arbitrum, Avalanche, Optimism, and Polygon. This is an understated foray into Ethereum’s Layer 2 space from a large institution. Ethereum’s Blob gas usage has remained at elevated levels showing a sustained increased demand for Layer 2 activity even ahead of BlackRock’s expansion.

Turning to derivatives – BTC’s implied volatility skew has shown a bullish preference for calls over the last week. Short-dated options, including the 7D tenor, have skewed less towards calls over the last 24H as spot sticks to the $89K level.

Perp funding rates still indicate that market participants are seeking leveraged exposure. Levels have not broken past the highs of this week but show a positive sentiment for a continuation of the rally.