ETH Continues To Rally

Daily Updates:

• For the first time since December 2024, the second largest cryptocurrency broke past $4,000. The weekend move has extended, and ETH now trades at $4,300. 
• The token is now up more than 190% from its April Liberation Day lows and has been bolstered by continued demand from Spot ETH ETFs and institutional demand in the form of corporate treasury firms. 
• Spot ETH ETFs purchased $461M worth of Ether tokens on Friday, bringing the net inflows from all nine products to $6.7B since the start of the year. Digital asset treasury companies on the other hand have purchased $13B worth of Ether tokens over the same period.
• Derivatives markets are reflecting the bullish sentiment. ETH’s term structure of volatility inverted briefly on the weekend, as the implied volatility on 7-day options jumped to 72%. Since then, the term structure has compressed with IV levels across tenors ranging between 64% and 67%. Put-call skews for ETH options are all positive with a 7-day skew just short of 4%, a signal that demand for calls and upside exposure is trading at a premium to demand for OTM puts. ETH funding rates also jumped to 0.02% on an eight-hourly basis over the weekend before falling. 
• While derivatives metrics are pointing to bullish sentiment, that sentiment is far less exuberant compared to levels seen earlier in the month of July. Between July 1, 2025 and July 21, 2025, ETH’s spot price rallied from $2,400 to $3,800 and options markets assigned an 11% premium to OTM calls over puts. 

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• Last Friday gold prices soared past $3,400 amidst fears over supply disruptions, as the US Customs and Border Protection agency announced in a statement that one-kilogram and 100-ounce gold bars exported by Switzerland into the US would be subject to tariffs. 
• However, prices subsequently fell by over $30 an ounce in after-market trading when President Trump’s administration said that it would issue an executive order clarifying that gold exports to the US would not face tariffs.
• Gold has been trading range bound since April after it surged past $3,500 per ounce however it has been supported by continued buying demand from central banks. The People’s Bank of China, PBoC, announced its purchase of 60,000 troy ounces in July, marking the nine straight month of consecutive purchases.

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• As markets continue to price in at least two more rate cuts from the Federal Reserve before the end of 2025, Fed speakers maintain divergent views on how President Trump’s erratic tariff policy making will impact inflation. Last Friday St Louis Fed President Alberto Musalem said he supported the FOMC’s decision to leave interest rates unchanged in their July meeting.
• “The economy is such that we are missing on our inflation target … We are not missing on our employment mandate”. That mirrors recent comments from Cleveland President Beth Hammack following July’s disappointing employment report, where she said “Right now we’re missing by much more on the inflation side than we’re missing on the employment side”. 

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• In an interview with Nikkei Asia, Treasury Secretary Scott Bessent stated that the US administration plans to complete negotiations with remaining trade partners that are yet to make a trade deal by the end of October. 
• Bessent also stated that Federal Reserve independence is important, though the next Central Bank head should be someone “very attuned to forward thinking, as opposed to relying on historical data.” 
• The US and China’s tariff pause is also due to expire tomorrow on August 12, as President Trump has threatened to increase tariffs on the nation for its purchase of Russian oil.
• China’s Foreign Ministry has defended the country’s Russian oil buys, stating on Friday that it is "legitimate and lawful for China to conduct normal economic, trade and energy cooperation with all countries around the world, including Russia”.

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• Nasdaq-listed CEA Industries, who rebranded its ticker symbol from VAPE to BNC on Aug 6th, have purchased 200,000 $BNB worth $160M, becoming the largest corporate BNB holder globally.
• The move followed CEA Industries’ Aug 5th announcement of successfully closing a $500M private placement offering to advance its BNB treasury strategy.
• BNB’s price has moved up around 1.5% overnight, in line with the broader crypto uptick and stands at up 17.5% over the past month.

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• El Salvador has enacted a new Investment Banking Law that differentiates between investment and commercial banks, sets different rules for these institutions to hold digital assets and to offer crypto-related services exclusively to institutional investors.
• Banks with a Digital Asset Service Provider (PSAD) license will be able to operate in local, foreign and digital currencies allowing for the creation of an entirely digital asset backed bank.

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