BTC Breaks $112K High

Daily Updates:

• Yesterday evening BTC rallied straight through $112K to a new all-time high — though only $29 higher than its May 22nd previous high. Nonetheless, that brings its year-to-date performance to 19%. Funding rates on BTC perpetual futures contracts jumped to their highest levels in exactly a month (0.02%) as traders showed a strong willingness to pay for leveraged upside exposure. 
• That rally in the largest cryptocurrency did not occur in a vacuum, however. Large US tech stocks rebounded in yesterday’s trading session, with Nvidia touching a $4T market-cap. The S&P 500 jumped 0.61% bringing it back within a few points of its all time high, and the Nasdaq 100 index ended the day 0.72% higher. 
• Altcoin outperformance however was on full display yesterday and through today too – ETH is up 6% in the past 24 hours, having reclaimed the $2,800 mark.
• With those moves in spot price, BTC’s term structure of volatility has lifted up across the curve, driven by a 4 percentage point increase at the front-end. The volatility premium on 7-day BTC options rose from 28% to 34%, and volatility smiles across tenors are now all skewed towards OTM calls. That marks a stark turnaround from 24 hours ago, when short-tenor smiles were only moderately bullish, with a less than 1% skew towards OTM call options. 
• The implied volatility of ETH options jumped by a larger amount, with premiums across maturities now each at 63%. That has flattened the term structure, though has not yet resulted in an inversion. 
• In our beginning-of-the-year outlook report we highlighted three main drivers of BTC price action. Since then, we have consistently maintained that drivers would continue to influence spot price activity. 
• Halfway into the year, all three of those drivers – regulations, supply & demand, and finally macro are acting as a confluence of tailwinds. 
• The passing of the GENIUS Act and staff statements from the SEC constituting staking as a non-securities activity, voracious, sticky demand from ETF inflows ($215.7M yesterday) and finally, market expectations of at least two rate cuts before the year end support all three of the main drivers. 

‍

• Interestingly, the risk-on momentum gripping financial markets occurred despite President Trump sending a slew of tariff letters to the US’s trading partners. 
• Starting August 1, Trump plans to impose a 50% levy on goods from Brazil — a 5x increase from the tariff rate imposed in April when Trump unveiled his now infamous reciprocal tariffs board. 
• Other levies announced on Wednesday include a 30% tariff rate on Algeria, Libya, Iraq and Sri Lanka, and 25% on goods from Brunei and Moldova.
• The tariff rate on Brazil stands out as, back in April, the nation was only subject to the 10% baseline tariff and not the extra duties Trump imposed on other nations. That was likely due to the fact that Brazil runs a trade deficit with the US — in 2024, Brazil imported $44B of goods from the US, while exporting $42B. 
• Despite that, Trump cited the cause of the 50% tariff rate on Brazil’s treatment of former President Jair Bolsonaro and an alleged coup attempt. In his letter to Brazil, Trump said “This Trial should not be taking place. It is a Witch Hunt that should end IMMEDIATELY!”  
• Asked at the White House how the tariff rates were determined, Trump told reporters it was “based on common sense, based on deficits, based on how we’ve been over the years, and based on raw numbers”. The president added that “They’re based on very, very substantial facts, and also past history”. 
• The FOMC’s meeting minutes for June showed a growing divide amongst individuals over the path of interest rate cuts. That path is largely being clouded by diverging expectations on the impact of tariffs on inflation.
• According to the meeting minutes, there are essentially three camps within the FOMC: 

“Most participants assessed that some reduction in the target range for the federal funds rate this year would likely be appropriate”

“Some participants saw the most likely appropriate path of monetary policy as involving no reductions in the target range for the federal funds rate this year, noting that recent inflation readings had continued to exceed the Committee’s 2 percent goal”

“A couple of participants noted that, if the data evolve in line with their expectations, they would be open to considering a reduction in the target range for the policy rate as soon as at the next meeting”

• Japan’s Producer Price Index (PPI) rose 2.9% YoY in June, down from May’s 3.3%, but in line with the expectations, signalling a continued easing in upstream inflation. 
• A stronger Yen is helping drive this, with import prices falling -12.3% YoY, a deeper drop than May -10.3%.
• Food and beverage inflation remains elevated, rising 4.5% YoY on persistent rice costs, but showing a slight deceleration from May’s 4.7%. 

‍

• U.S. spot Bitcoin ETFs surpassed $50B in cumulative net inflows yesterday, according to the data from SoSoValue. The 12 funds reported a total of $218M in daily inflows on July 9, led by BlackRock’s IBIT with $125.5M, followed by Ark 21Shares’ ARKB and Grayscale's Mini Bitcoin Trust.
• According to Rachael Lucas, crypto analyst at BTC Markets, the sustained and significant inflows reflect increased participation from asset managers, corporate treasures, and wealth management platforms rather than retail investors, highlighting BTC’s maturation as an institutional risk asset.
• Ripple, a leading blockchain company focused on transforming cross-border payments, announced yesterday, July 9, BNY Mellon as the primary custodian for Ripple USD (RLUSD) reserves – its NY DFS-regulated, fully backed stablecoin built for institutional use.
• BNY will serve as custodian for RLUSD reserves, responsible for maintaining full USD backing with liquid assets, regular audits, and defined redemption procedures. 

‍

• Donald Trump Jr.-backed Thumzup Media Corporation (Nasdaq: TZUP), has announced board approval to diversify its crypto treasury and begin adding Dogecoin (DOGE), Litecoin (LITE), Solana (SOL), Ripple (XRP), Ether (ETH), USD Coin (USDC).
• Thumzup currently holds 19.106 BTC as part of its existing strategy, which permits the Company to hold up to 90% of its liquid assets in BTC.

‍

• The proposal to make Trump-backed World Liberty Finance’s “$WLFI token tradable”  is open for votes, currently standing at a 99.94% majority in favor of “Yes.” 
• If the proposal is passed, the $WLFI smart contract will be upgraded to remove existing transfer function restrictions. This would allow the token to be transferred through peer-to-peer transactions and listed on secondary markets.
• The rationale is to enable broader community access to governance participation.

This Week’s Calendar:

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