Andrew Melville
Research Analyst
Last Updated:
December 4, 2024
•
2 min read
Crypto Markets Daily Nov 25 2024
Bitcoin dominance is on watch as Ethereum sustains its sharp outperformance following Gensler's exit announcement last week. Derivatives markets shift attention to ETH bullishness, strongly inverting its term structure while BTC's remains "just" flat, seemingly the first time since the election that ETH has enjoyed a significantly more dislocated term structure than BTC. However, it is 2020 / 2021 favourites that have recorded the best returns over the last week. Trump's latest administration pick is taken well by markets, leading some to revise their expectation for the more extreme impacts of tariffs.
Ethereum Promises
Various altcoins from the 2020/21 crypto cycle, that have largely lagged in moves against newer coins of the current cycle, were among the best performers over the weekend. These include altcoins such as XLM, VET, DOT and SAND — tokens that are yet to recover 2021 highs.
Memecoins underperformed — interesting given that we had previously speculated that increased memecoin activity earlier than expected in the current bull cycle may upset the usual pattern of capital rotation from BTC to ETH to altcoins. Despite this outperformance, it isn’t yet the sort of reversal in market cap composition that many are waiting for.
While Bitcoin dominance has not reversed yet, the two previous post-halving dominance cycles have run longer than the current cycle.
This continues what we saw in ETH – historically one of the first tokens to feel the benefit of capital rotation from BTC profit taking – before the weekend. ETH has continued its outperformance over BTC following the announcement of Gary Gensler’s planned departure from the SEC on inauguration day.
The move in ETH has been sustained in derivatives markets too – whereas the post-election impact was not. While BTC vol levels remain very close together across tenors – resulting in an inverted term structure once again – levels of volatility priced-in at the short-end of ETH’s term structure have surpassed pre-election levels and inverted throughout the weekend.
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That’s matched by a strong tilt towards upwards exposure at all tenors as demand for OTM calls increases.
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In Macro over the weekend – Trump has chosen Scott Bessent as Treasury Secretary who has a more moderate view of tariffs, arguing they result in a “one time price adjustment” and should be “layered in gradually”. The pick has coincided with the dollar paring back some of its gains after a long run of strength, suggesting traders are pricing out the fullest extent of Trump’s tariff promises. Similarly, the yield on the U.S. 10Y treasury also fell from 4.42% to 4.34%.
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Crypto Markets Daily Dec 20 2024
Crypto markets are in turmoil with Bitcoin plunging -7.7% in 24 hours, flipping market odds for December price targets on their head. Despite the short-term chaos, long-term bullish sentiment persists - could this be the dip before a rally?
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Crypto Markets Daily Dec 19 2024
The Fed’s 25bps rate came with an unsettling hawkish tone from Chair Powell, jolting markets and unveiling the prospect of fewer 2025 cuts. Traders re-evaluate their risk-on strategies as both equities and crypto see red.
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Crypto Markets Daily Dec 18 2024
Markets brace for pivotal central bank decisions this week. We analyse the latest shifts in sentiment across crypto with a focus on bitcoin’s volatility smiles, funding rates, and spot price trends. Read now to explore the cautious tone gripping traders, muted OTM call activity, and key data points shaping market sentiment.