Crypto Markets Daily Feb 28 2025

Daily Updates:

• Bitcoin’s selloff intensified during the opening of Asian equity trading hours once again. BTC is down 8% on the day already, falling to an intra-day low of $78.5K, with ETH faring even worse at $2.2K (-10%) and SOL, down the least in the top 10 at $131 (-6%). 
• Today deeper correction has resulted in BTC and ETH’s implied volatility term structures to invert more significantly. For BTC, 7-day tenor ATM vol has spiked up dramatically, almost matching levels during the term structure inversion at the start of the month. Then, the inversion was caused by President Trump’s weekend Executive Order tariff announcement. ETH’s term structure has equally inverted more steeply, with front-end vol jumping near 20 points from yesterday. 
• Yesterday we highlighted that similar spot price sell-offs had seen major spikes in 1-month implied vol – something we had not yet seen in the current sell-off. Today’s deeper sell-off has pushed ATM 1-month tenor vol back up close to 53%. This is a level last seen during the early February spot-price sell-off driven by tariff announcements. 
• Skew levels at short-tenors for BTC have dropped to their lowest levels all month, with 7-day tenor skew now even more strongly put-skewed (around 10%). One-month tenor skew is now also firmly skewed towards puts, after initially lagging the move lower in spot. Longer-dated optionality is still bullish, holding the same skew towards calls that it has since the election in November.

‍

• In our recent macro report we highlighted that following the post-election exuberance, through much of December 2024 and early January 2025, Bitcoin lacked a clear directional catalyst which in turn left it at the behest of macro drivers. 
• Yesterday’s macro data showed the second estimate for Q4 2024 GDP remained the same at 2.3%, however the PCE price index for Q4 increased to 2.4%, up 0.1% from the previous estimate, and the core PCE price index increased to 2.7%, from 2.5%, respectively. 
• Additionally, earlier in the week, pending home sales – a forward-looking indicator of home sales based on contract signing, dropped by 4.6% in January, and purchases of new single-family homes decreased 10.5% last month, according to the Census Bureau data. 
• As covered earlier in the week, fears of a growth slowdown are pushing market expectations towards at least two rate cuts in 2025 now. PCE inflation for January is expected later today, with economists expecting the core figure to fall to 2.6%.

‍

• Yesterday President Trump also stated via his Truth Social, media platform, that he plans to go ahead with his 25% tariffs on Canada and Mexico, and an additional 10% tax on Chinese imports, confirming that the above tariffs will go into effect from the 4th of March, and are separate to the reciprocal tariffs schedules to be proposed for April. 

‍

• Separately, inflation data for Tokyo, which is considered a leading indicator of nationwide inflation trends, were released yesterday. Core consumer prices in Tokyo rose 2.2% in February, compared to a year earlier, slower than the market expected 2.3% (and down from 2.5% in January). 
• Overall, the core number is still significantly above the BoJ’s 2% inflation target, keeping the BoJ on track to continue its monetary tightening program.

‍

• MetaMask, a crypto self custodial wallet protocol, will expand beyond Ethereum Virtual Machine chains for the first time. The roadmap for the year proposes to add support for Solana as soon as May, followed by a Bitcoin integration in the third quarter.
• THORChain’s volumes continue to outperform at the expense of the illicit Bybit Hack funds going through the platform. The protocol reached an ATH daily volume of $860M swaps on Feb 26. Volumes were sustained  yesterday  at approximately  $705M.
• Uniswap has announced its newest feature to make swaps between crypto and cash a seamless experience for users. The feature leverages technology from Robinhood, Moonpay, and Transak to allow users in 180+ countries to sell supported tokens and deposit funds directly into their bank accounts.
• BDACS, a leading digital asset custody firm in South Korea, has partnered with Ripple to provide institutional-grade Ripple Custody for XRP, RLUSD and other crypto assets.

This Week’s Calendar:

Charts of the Day:

‍