“It's not sustainable, but that's what the number is”

Find out our latest reports, listed below:

• Bybit x Block Scholes Quarterly Report: Rise of Perp DEXs — and how to catch the opportunity

• How did options markets react to the crypto selloff?

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• Metaplanet Is Selling Vol, Who Is Next?

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• Bybit x Block Scholes August Volatility Review

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Market Snapshot: Overnight Moves:

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Daily Updates:

• The conciliatory stance from President Trump on Friday with regards to his tit-for-tat trade war with China has encouraged a modest recovery rally in crypto asset prices beginning last Friday. 
• BTC initially edged up from $104K to $107K on Friday before rangebound price action early in the weekend. However, a stronger Sunday rally has seen it reclaim $111K. 
• Ether also experienced a similarly staggered move higher over the weekend. On Friday it rose from $3,700 to $3,900 before the Sunday rally allowed it to reclaim $4,000. 

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• The weekend move has also inspired a significant recovery in options markets sentiment. While volatility smiles for BTC and ETH have not totally reversed their relative richness towards OTM puts, we see a major weakening in the bearish sentiment that dominated earlier last week. 
• The put-call skew ratio on one-week BTC contracts currently trades with a 1% vol premium towards OTM puts, from a 7% premium only 24 hours ago. 
• The ratio of ATM volatility between 7-day ETH options and 7-day BTC options is currently at 1.5 — that’s a significant drop from the 2.2 level we highlighted earlier this year in our July Volatility Review with Bybit. However, as the term structure of volatility for both assets is currently flat, ETH vol is roughly 1.5x higher than BTC’s across most tenors in general. 

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• The easing in trade tensions stemmed from an interview with Fox Business aired on Friday where President Trump claimed his 100% plus tariffs with China were not feasible – “It's not sustainable, but that's what the number is. It's probably not – it could stand, but they forced me to do that. I think we're going to do fine with China. I get along great with him.”
• That also helped US equities end Friday’s trading session higher, after a more unnerving week as trade tensions, the US government shutdown and concerns over credit markets and regional banks had seen a period of derisking on Wall Street. 
• The S&P 500 bounced 0.53% resulting in the index having its best weekly session since August, while US treasuries across the yield curve bounced from their lows as the flight to safety tensions eased. 

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• Fed funds futures currently assign a 98.9% probability of another 25bps rate cut in the FOMC’s October meeting in 9 days and a small 1.1% probability for no change in the federal funds rate. On Friday, the President of the St Louis Federal Reserve, Alberto Musalem, said “I could support a path with an additional reduction in the policy rate if there are further risks to the labour market that emerge”, however cautioned that given persistent inflation the Fed should avoid a “preset course". 
• Musalem also said “I see limited room for further easing before monetary policy could become overly accommodative.”
• Despite the US government shutdown, the BLS will release the September CPI print on Friday this week, giving FOMC members an inflation print to deliberate over. The September CPI report was originally slated for October 15 — according to the Bloomberg median estimate, expectations are for a 0.3% MoM increase in core CPI, keeping the annual rate flat at 3.1%.
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• Alibaba-backed Ant Group and e-commerce giant JD.com have suspended their stablecoin plans after Chinese regulators, including the People’s Bank of China and the Cyberspace Administration of China, raised concerns over privately issued digital currencies. 
• The two firms had previously lobbied the central bank to approve Chinese yuan-based stablecoins to counter the global dominance of US dollar-pegged tokens. 
• Previously, JD.com had proposed launching offshore yuan-backed stablecoins in Hong Kong before expanding to China’s free trade zones and had been preparing to apply for stablecoin licenses in Hong Kong and Singapore.

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This Week’s Calendar:

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Charts of the Day:

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