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Last Updated:  
May 14, 2025
2 min read

Liberation from Tariffs

ETH continues its rally today, bringing its weekly performance up to 45%, outperforming both BTC and SOL. The major fluctuations in price are causing large moves in short-tenor volatility, which collapsed earlier in the week before rebounding back to 70%, and reinverting its term structure. Short-tenor smile skews for ETH have also been soaring, now assigning a 7% premium to OTM calls. In macro, Trump’s tariff war is still yet to show up in the hard inflation data as April's headline CPI fell more than expected, for the third consecutive month.

Daily Updates:

  • The US and China’s three month truce on tariffs continues to bolster risk-on assets as the S&P 500, Nasdaq-100, and the top 10 cryptocurrencies by market capitalization have all rallied over the past 24 hours. 
  • Closing up 0.7% on Tuesday, the S&P 500 has not only officially wiped out its Liberation Day losses, but all of its losses for the year too. 

  • After Monday’s brief pause, today ETH’s outperformance is once again on display. A 9% rally over the past 24 hours brings its weekly performance up to 45%, as it continues to outperform both BTC (+1.35%) and SOL (7.14%). 
  • Those major fluctuations in price are causing large changes in its options markets. After the sideways spot movement at the start of the week, we saw a major collapse in the front-end volatility premium, though we noted here that this could change should the rally pick up steam again. That’s exactly what happened —  front-end volatility briefly spiked close to 80%, firmly reinverting the term structure of volatility, before briefly dropping off back to 70%. 
  • Short-tenor smile skews for ETH have been soaring, now assigning a 7% premium to OTM calls. 
  • Volatility expectations in BTC options has been more subdued, however BTC skew is also supporting the rally, with the 7day tenor currently holding a 5% bias towards calls. 

  • Trump’s tariff war is still yet to show up in the hard inflation data however. Yesterday’s CPI data for April, a month where Trump first announced and then lowered his reciprocal tariffs program, eventually landing at a baseline 10% for most countries, and 145% on Chinese imports, showed a drop in headline inflation — the third consecutive month where headline price growth fell more than expected.  
  • The headline figure rose 0.2% month-on-month, for a year-over-year rate of 2.3%, below economists forecasts and March’s 2.4%. The core CPI however remained sticky at 2.8% YoY. 

  • Despite a lower headline rate, markets did not rush to price further rate cuts for the year and overnight swaps continued to price in 2 quarter-point rate cuts before year-end. 
  • President Trump was quick to take his gloves to Chair Powell, as we have often seen him do following a number of macro data releases this year. 
  • On Truth Social, the President said “No Inflation. THE FED must lower the RATE, like Europe and China have done. What is wrong with Too Late Powell?” 
  • Adding to that, Trump stated that Chair Powell’s wait-and-see approach “was not fair to America, which is ready to blossom”. 

  • Trump’s desire for a more aggressive rate cutting cycle is also in direct contradiction to recent comments made by members of the Fed too. Speaking in an interview with the New York Times, Chicago President Austan Goolsbee said the new 30% levies on Chinese goods for the next 90 days “is definitely less impactful stagflationarily than the path they were on", though noted it is "three to five times higher than what it was before, so it is going to have a stagflationary impulse on the economy. It’s going to make growth slower and make prices rise". 
  • Goolsbee also believes that due to the administration’s “explicit recognition” that the current tariff rate “isn’t permanent”, there is a sentiment among corporate America to “sit on their hands” and “if they’re sitting on their hands, that backs into the wait-and-see posture of the Fed."

  • The U.S. Securities and Exchange Commission (SEC) has delayed its decision on Grayscale’s proposed Litecoin Trust ETF, extending the review period as it continues evaluating potential market risks and investor protections.
  • Similarly, the SEC has also delayed its decision on Grayscale’s Solana Trust ETF, with the agency requesting additional public input and analysis before proceeding further.

  • However, the SEC has officially accepted 21Shares’ Dogecoin ETF application for review, making a significant step forward for memecoin-based financial products. A decision deadline has not yet been set.

  • Standard Chartered is partnering with FalconX, a leading digital assets prime broker, to enhance crypto services for institutional investors. 
  • The collaboration will begin in Singapore, with plans to expand into the U.S., Middle East and broader Asia.

  • Circle has launched their USDC token on the Sonic blockchain, replacing the currently bridged USDC.e to the native stablecoin. Sonic blockchain have also integrated Circle’s Cross-Chain Transfer Protocol Version 2 (CCTP V2) allowing for movement of the token across supported blockchains.

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
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Daily Updates:

  • The US and China’s three month truce on tariffs continues to bolster risk-on assets as the S&P 500, Nasdaq-100, and the top 10 cryptocurrencies by market capitalization have all rallied over the past 24 hours. 
  • Closing up 0.7% on Tuesday, the S&P 500 has not only officially wiped out its Liberation Day losses, but all of its losses for the year too. 

  • After Monday’s brief pause, today ETH’s outperformance is once again on display. A 9% rally over the past 24 hours brings its weekly performance up to 45%, as it continues to outperform both BTC (+1.35%) and SOL (7.14%). 
  • Those major fluctuations in price are causing large changes in its options markets. After the sideways spot movement at the start of the week, we saw a major collapse in the front-end volatility premium, though we noted here that this could change should the rally pick up steam again. That’s exactly what happened —  front-end volatility briefly spiked close to 80%, firmly reinverting the term structure of volatility, before briefly dropping off back to 70%. 
  • Short-tenor smile skews for ETH have been soaring, now assigning a 7% premium to OTM calls. 
  • Volatility expectations in BTC options has been more subdued, however BTC skew is also supporting the rally, with the 7day tenor currently holding a 5% bias towards calls. 

  • Trump’s tariff war is still yet to show up in the hard inflation data however. Yesterday’s CPI data for April, a month where Trump first announced and then lowered his reciprocal tariffs program, eventually landing at a baseline 10% for most countries, and 145% on Chinese imports, showed a drop in headline inflation — the third consecutive month where headline price growth fell more than expected.  
  • The headline figure rose 0.2% month-on-month, for a year-over-year rate of 2.3%, below economists forecasts and March’s 2.4%. The core CPI however remained sticky at 2.8% YoY. 

  • Despite a lower headline rate, markets did not rush to price further rate cuts for the year and overnight swaps continued to price in 2 quarter-point rate cuts before year-end. 
  • President Trump was quick to take his gloves to Chair Powell, as we have often seen him do following a number of macro data releases this year. 
  • On Truth Social, the President said “No Inflation. THE FED must lower the RATE, like Europe and China have done. What is wrong with Too Late Powell?” 
  • Adding to that, Trump stated that Chair Powell’s wait-and-see approach “was not fair to America, which is ready to blossom”. 

Daily Updates:

  • The US and China’s three month truce on tariffs continues to bolster risk-on assets as the S&P 500, Nasdaq-100, and the top 10 cryptocurrencies by market capitalization have all rallied over the past 24 hours. 
  • Closing up 0.7% on Tuesday, the S&P 500 has not only officially wiped out its Liberation Day losses, but all of its losses for the year too. 

  • After Monday’s brief pause, today ETH’s outperformance is once again on display. A 9% rally over the past 24 hours brings its weekly performance up to 45%, as it continues to outperform both BTC (+1.35%) and SOL (7.14%). 
  • Those major fluctuations in price are causing large changes in its options markets. After the sideways spot movement at the start of the week, we saw a major collapse in the front-end volatility premium, though we noted here that this could change should the rally pick up steam again. That’s exactly what happened —  front-end volatility briefly spiked close to 80%, firmly reinverting the term structure of volatility, before briefly dropping off back to 70%. 
  • Short-tenor smile skews for ETH have been soaring, now assigning a 7% premium to OTM calls. 
  • Volatility expectations in BTC options has been more subdued, however BTC skew is also supporting the rally, with the 7day tenor currently holding a 5% bias towards calls. 

  • Trump’s tariff war is still yet to show up in the hard inflation data however. Yesterday’s CPI data for April, a month where Trump first announced and then lowered his reciprocal tariffs program, eventually landing at a baseline 10% for most countries, and 145% on Chinese imports, showed a drop in headline inflation — the third consecutive month where headline price growth fell more than expected.  
  • The headline figure rose 0.2% month-on-month, for a year-over-year rate of 2.3%, below economists forecasts and March’s 2.4%. The core CPI however remained sticky at 2.8% YoY. 

  • Despite a lower headline rate, markets did not rush to price further rate cuts for the year and overnight swaps continued to price in 2 quarter-point rate cuts before year-end. 
  • President Trump was quick to take his gloves to Chair Powell, as we have often seen him do following a number of macro data releases this year. 
  • On Truth Social, the President said “No Inflation. THE FED must lower the RATE, like Europe and China have done. What is wrong with Too Late Powell?” 
  • Adding to that, Trump stated that Chair Powell’s wait-and-see approach “was not fair to America, which is ready to blossom”.