Last Updated:

May 2, 2025

•

2 min read

Bounce off the floor

Risk appetite continued to recover as U.S. equities posted an eighth consecutive gain, with Bitcoin extending its three-week rally to briefly touch $97K. BTC short-tenor volatility rose to 40%, while option skews shifted further in favor of out-of-the-money calls. Gold declined to a two-week low despite remaining up 24% YTD. Treasury Secretary Bessent noted that bond markets are signaling the need for Fed rate cuts, citing two-year yields below fed funds. Meanwhile, Abu Dhabi’s MGX announced a $2B investment in Binance via the Trump-backed USD1 stablecoin, which has now integrated with the Tron network.

Daily Updates:

The cautious rekindling in risk appetite continued yesterday as US equities rallied for an eighth consecutive trading session, following the ‘Sell America’ narrative that recently gripped financial markets.
BTC followed US equities, continuing a now three week long rally and briefly touching $97K (a level it last reached in late February).
As we noted in yesterday’s daily comment, short-tenor volatility for BTC has consistently bounced off a floor of 35% for the past 18 months. We saw the same yesterday as short-tenor volatility bounced off that floor by over 5 points, now trading at 40%.
Volatility smile skews have tilted even further towards OTM calls across all tenors, with the 7-day skew up 4.3% over the past 24 hours.
Gold, on the other hand, to which BTC has recently increased its correlation, dropped to a two-week low however as risk-on sentiment seems to be prevailing in the market, although its YTD performance is still +24%.
According to the Treasury Secretary, Scott Bessent, bond markets are signalling that the Federal Reserve should soon begin to cut interest rates. Although Bessent previously advocated that the administration has a focus on 10-year yields and not interest rates, yesterday he stated that “we are seeing that two-year rates are now below fed funds rates. So that’s a market signal that they think the Fed should be cutting”.
President Trump also recently took his gloves to Jerome Powell once again during his Michigan rally where he claimed “I know much more than he [Powell] does about interest rates, believe me”.
Abu Dhabi-based MGX will invest $2 billion in Binance using Trump - backed WLF stablecoin, USD1. This investment marks Binance’s first institutional investment and one of Web3’s largest funding deals.
Separately, World Liberty Finance announced the integration of its stablecoin USD1 with the Tron network. Tron Network founder, Justin Sun and WLF co-founder Zach Witkoff aim to scale USD1 globally, projecting it to reach a multibillion-dollar market cap.

This Week’s Calendar:

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Charts of the Day:

Figure 1. BTC at-the-money implied volatility across selected tenors. *Source: Deribit, Block Scholes*

Figure 2. ETH at-the-money implied volatility across selected tenors. *Source: Deribit, Block Scholes*

Figure 3. BTC 25-delta put-call skew ratio across selected tenors. *Source: Deribit, Block Scholes*

Figure 4. ETH 25-delta put-call skew ratio across selected tenors. *Source: Deribit, Block Scholes*

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Thahbib Rahman

Research Analyst

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Daily Updates:

The cautious rekindling in risk appetite continued yesterday as US equities rallied for an eighth consecutive trading session, following the ‘Sell America’ narrative that recently gripped financial markets.
BTC followed US equities, continuing a now three week long rally and briefly touching $97K (a level it last reached in late February).
As we noted in yesterday’s daily comment, short-tenor volatility for BTC has consistently bounced off a floor of 35% for the past 18 months. We saw the same yesterday as short-tenor volatility bounced off that floor by over 5 points, now trading at 40%.
Volatility smile skews have tilted even further towards OTM calls across all tenors, with the 7-day skew up 4.3% over the past 24 hours.
Gold, on the other hand, to which BTC has recently increased its correlation, dropped to a two-week low however as risk-on sentiment seems to be prevailing in the market, although its YTD performance is still +24%.
According to the Treasury Secretary, Scott Bessent, bond markets are signalling that the Federal Reserve should soon begin to cut interest rates. Although Bessent previously advocated that the administration has a focus on 10-year yields and not interest rates, yesterday he stated that “we are seeing that two-year rates are now below fed funds rates. So that’s a market signal that they think the Fed should be cutting”.
President Trump also recently took his gloves to Jerome Powell once again during his Michigan rally where he claimed “I know much more than he [Powell] does about interest rates, believe me”.
Abu Dhabi-based MGX will invest $2 billion in Binance using Trump - backed WLF stablecoin, USD1. This investment marks Binance’s first institutional investment and one of Web3’s largest funding deals.
Separately, World Liberty Finance announced the integration of its stablecoin USD1 with the Tron network. Tron Network founder, Justin Sun and WLF co-founder Zach Witkoff aim to scale USD1 globally, projecting it to reach a multibillion-dollar market cap.

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Daily Updates:

The cautious rekindling in risk appetite continued yesterday as US equities rallied for an eighth consecutive trading session, following the ‘Sell America’ narrative that recently gripped financial markets.
BTC followed US equities, continuing a now three week long rally and briefly touching $97K (a level it last reached in late February).
As we noted in yesterday’s daily comment, short-tenor volatility for BTC has consistently bounced off a floor of 35% for the past 18 months. We saw the same yesterday as short-tenor volatility bounced off that floor by over 5 points, now trading at 40%.
Volatility smile skews have tilted even further towards OTM calls across all tenors, with the 7-day skew up 4.3% over the past 24 hours.
Gold, on the other hand, to which BTC has recently increased its correlation, dropped to a two-week low however as risk-on sentiment seems to be prevailing in the market, although its YTD performance is still +24%.
According to the Treasury Secretary, Scott Bessent, bond markets are signalling that the Federal Reserve should soon begin to cut interest rates. Although Bessent previously advocated that the administration has a focus on 10-year yields and not interest rates, yesterday he stated that “we are seeing that two-year rates are now below fed funds rates. So that’s a market signal that they think the Fed should be cutting”.
President Trump also recently took his gloves to Jerome Powell once again during his Michigan rally where he claimed “I know much more than he [Powell] does about interest rates, believe me”.
Abu Dhabi-based MGX will invest $2 billion in Binance using Trump - backed WLF stablecoin, USD1. This investment marks Binance’s first institutional investment and one of Web3’s largest funding deals.
Separately, World Liberty Finance announced the integration of its stablecoin USD1 with the Tron network. Tron Network founder, Justin Sun and WLF co-founder Zach Witkoff aim to scale USD1 globally, projecting it to reach a multibillion-dollar market cap.

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10-Point Stimulus

Risk off sentiment prevailed on Wall Street for a second consecutive day as President Trump's tariff stance continues to weigh on markets. However, a late evening announcement of a trade meeting between the US and China resulted in BTC rallying, alongside US equity futures. BTC spot rose from $94K to $97K as implied volatility across the term structure bounced up. Complementing the higher volatility expectations is a rebound in the put-call skew ratio, particularly at the front-end, which has shot up towards calls (at 2%) once again. The PBOC announced a 10-point stimulus plan including a cut to the seven-day reverse repurchase rate and the reserve requirement ratio (RRR) for banks.

Nine Session Break

US equities break a nine day consecutive rally as BTC continues to trade in a range of $93K and $97K. Despite April's tariff uncertainty continuing into May, implied volatility levels are markedly lower compared to April levels. The premium that traders had assigned to out-the-money BTC calls at the start of the month has now faltered closer to neutral for short-tenors. That move has been more emphasised in ETH, where skew is now tilted towards puts for tenors shorter than 30 days. Strategy continues to expand its Bitcoin holdings while Florida’s strategic Bitcoin reserve bill has been “indefinitely postponed and withdrawn from consideration”.