Crypto Markets Daily Nov 21 2024

Bitcoin tries for $100K. Longer-dated volatility has finally followed the front-end of the term structure higher after two weeks of inversion -- as we highlighted in yesterday's comment. Short-dated ETH skews remain pinned while longer-dated stuff expresses increasing bullish sentiment, despite a pickup in onchain activity. Trump mulls a "crypto-czar" role for his incoming administration.

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Volatility for the Long-Term

BTC looks primed to cross the large psychological barrier at $100K, rallying above $97.7K on Thursday morning. BTC Spot ETFs continue their surge in inflows, pulling in $773.4M. We’ve seen volatility as BTC spot price has approached round numbers on the way up – bouncing off of $93K to trade at $87K 7 days ago. We expect volatility around this point too as traders likely take profits at the first 6-figure spot price.

The inversion of the term structure has continued – however, as we highlighted in yesterday’s daily comment, longer-dated volatility has followed up further, rising by a significant 6 vol points over the last 2 days for the first time. Options markets are finally pricing in higher vol expectations over a longer period.

Figure 1. BTC at-the-money implied volatility at several constant tenors . *Source: Block Scholes*

While BTC skew remains bullish across the term structure, ETH has seen a shift in sentiment. Longer-tenor volatility smiles reflect increasing bullish positioning similar to BTC, but shorter tenors remain unchanged (but still bullish).

Figure 2. ETH 25-delta call-put skew at several constant tenors. *Source: Block Scholes*

This does reflect some of the poor relative performance of ETH vs BTC over the last week – giving up any of the immediate post-election outperformance and continuing its trend down. However, onchain metrics for Ethereum do show some positive signs – dApp volume has surged 38% MTD.

President-elect Trump has reportedly held discussions regarding a position in the White House purely focused on overseeing cryptocurrency policy and regulation – this would be the first such post in any U.S. administration. Polymarket implied-odds of Trump creating a Bitcoin Strategic Reserve by April 2025 increased from 35% to 45% too. This follows news earlier this week of Trump’s nomination of Howard Lutnick as Commerce Secretary, another pro-crypto candidate.