Andrew Melville
Research Analyst
Last Updated:
December 4, 2024
•
2 min read
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.
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.
.png)
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).
.png)
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.
.png)
.jpg)
Free
PREMIUM
Institutional
Introducing Rho Protocol
Rho Protocol is the first crypto-native rate derivatives exchange. Rho rates futures are financial derivatives which allow users to trade fixed-to-floating rate swaps on BTC and ETH perpetual futures funding rates and on ETH staking rates. In this report, we uncover how exactly Rho Protocol works.
.jpg)
Free
PREMIUM
Institutional
What A Week!
We’ve previously spoken about idiosyncratic factors in Bitcoin’s favour that could break its correlation to equities – the post-halving halving impact on supply, the ETF effect on demand, and a positive regulatory environment.
But wow, what a week – Bybit’s exchange hack, record outflows in the Spot Bitcoin ETFs, and the 90% plus drops in a multitude of Solana memecoins launched by high-ranking officials across different nations would have been enough to damage bullish sentiment without risk-on sentiment tanking across all assets.
Free
PREMIUM
Institutional
Breaking Bitcoin’s Correlation With Macro
Historically BTC's returns have been driven by three main drivers. One of these drivers, mainly the macroeconomic backdrop is posing strong headwinds for risk-on assets. With BTC's strong correlation to US equities, one would expect it too could suffer from the more hawkish macro environment. In this report we delve into the remaining two drivers that are supporting Bitcoin and pose an argument that it could potentially detach from its macro correlation with US equities in the long-term as a result of these unique, idiosyncratic factors.