Crypto Markets Daily Nov 29 2024

Crypto markets quieter over thanksgiving, but still express their bullish positioning in derivatives markets as BTC takes another run at its next price target. ETH outperformance is on hold, delaying any hopes of an altcoin until at least tomorrow. The Fed's December meeting will be informed by NFP numbers next week, after last month's numbers were confounded by strikes and hurricanes.

Crypto

Derivatives

DeFi

Macro

Thanksgiving Volatility Lull

While many TradFi markets were closed due to Thanksgiving in U.S. yesterday and an earlier closing of the stock market today (and thus no chance to record ETF flows into either BTC or ETH’s spot ETFs), limited activity defines BTC and ETH’s spot and options markets too. Implied volatility levels have been on a downward trend for the two major assets. This lines up with our previous observations that both exchange volume and volatility are lower outside of U.S. trading hours and on weekends.

ETH is still maintaining a larger volatility premium over BTC, as we have noted previously, but it is BTC that has led the charge higher in spot on Friday in another attempt to break the $100K barrier.

Figure 1. BTC (yellow) and ETH (purple) at-the-money implied volatility at a constant 30-day tenor. *Source: Block Scholes*

Perpetuals are showing a bullish story too – funding rates are still registering extremely high positive levels as traders continue to stubbornly seek long leveraged exposure to spot, despite the recent short-term lack of movement. Skew has fallen slightly – but still remains extremely bullish for all tenors.

Figure 2. BTC perpetual swap funding rate on Deribit markets. *Source: Block Scholes*

BTC has outperformed today, leading the rally, and those waiting on the altcoin rally may need to wait a little longer. On the topic of wider altcoins, AI coins have particularly outperformed in the last 24 hours (and rather throughout this week). This has partially been driven by a trend in AI agents – autonomous on-chain agents that utilise artificial intelligence to interact with different blockchain protocols, helping users manage their portfolios and place trades for users amongst other examples.

Virtuals protocol, a platform on the Base chain, which allows users to deploy their own AI agents is up 50% today (the best performing token in the past 24 hours), and over 160% on the week. Another AI platform SingularityNET, which merged with two AI tokens earlier in the year, announced a partnership with Mina Foundation, aiming to develop zero-knowledge (ZK) and artificial general intelligence (AGI) applications to enhance data protection and user privacy.

Looking ahead into next week, U.S. nonfarm payroll data will be particularly important – especially given the growing divergence in underperformance between Europe and the U.S. The data will give us the first real indication of the number of jobs added to the economy in two months given the markedly lower figures reported in the October report due to weather and strike impacts.

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