Middle East Tensions Lift Oil as Markets Brace for US CPI

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In Today's Note

• US equities closed near record highs on Friday as Houthi strikes on Saudi Arabia lifted Brent toward $105, while BTC rose 0.6% to $83.4K and ETH gained 2.0% to $2,550 overnight ahead of this week's CPI.
• XRP Ledger patched a critical supply-cap bug, Blockchain.com applied for CFTC licences, and Ledger is probing over $86M in losses linked to a Southeast Asian reseller.

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Market Snapshot: Overnight Moves

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Macro & Markets

• US equities closed on Friday near their all-time highs while BTC rose from $80K to $83K and spent the weekend consolidating under $84K. 
• Most companies in the S&P 500 rose, pushing the index up 0.59% for the day, though Wall Street’s chipmakers gauge fell for another day, down 0.41%. That extended a decline that began after reports that OpenAI was on track to generate an annualised revenue of around $50B, below previous estimates closer to $70B only a month ago. 
• The move higher in equities has occurred against a backdrop of still-elevated energy costs and bond yields, though the US Treasury market is closed today for Columbus Day. 

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• Over the weekend, Houthi militants have repeatedly targeted airports across Saudi Arabia, with the first incident occurring at King Khalid International Airport in the capital, Riyadh. 
• The violence continued into today after a Saudi-led military coalition fighting the Houthis said it intercepted missiles and drones aimed at the kingdom overnight, including areas that are home to some of Saudi Arabia’s key oil and gas facilities. 
• The attacks have raised the risk of a potential escalation in the US-Iran war and potential US intervention into the Saudi-Houthi conflict. 
• Asked on Saturday whether the US would join strikes against the Iranian-backed Houthis, President Trump said "We may. We're going to look at it."
• Oil prices edged higher following the strikes on the Saudi airport with Brent crude trading just under $105 a barrel and West Texas Intermediate around $92. 

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• Separately, in geopolitics, President Trump announced that Russia and Ukraine had agreed to an "energy ceasefire" effective immediately after Ukrainian attacks on Russian refineries have disrupted the country's refining capacity and contributed to tighter supply of diesel globally. 
• At the end of last week Trump also said the US would be working with Vladimir Putin to release Russia’s diesel supplies into global markets, upending years of sanctions on the country. 
• Trump told reporters at the White House on Friday, “That is massive amounts of oil coming into our country, and I want to thank President Putin. And it’s diesel, which is what we want.”
• The Kremlin also published a statement citing Putin who said Russia was ready “to supply oil and petroleum products to the US and global markets”, while the US Treasury issued a waiver for previously sanctioned Russian fuel.

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• Looking to the week ahead, markets will be focused on the BLS’s CPI report where the headline consumer price index is expected to rise 0.6% in September due to higher gasoline prices, following a 0.4% rise a month earlier. Core CPI is expected to rise a smaller 0.2% (compared to 0.3% in August) and 2.5% on an annual basis.
• Other macro data due to be released in the week include government figures for retail sales in September and the producer price index. 
• The International Monetary Fund’s annual meeting in Bangkok will also be in focus with speeches expected from Fed Chair Kevin Warsh and two other Fed officials, Governor Christopher Waller and Cleveland Fed President Beth Hammack. 

Defi/ Crypto

• XRP Ledger developers have patched a critical bug in the network’s payment engine, present since 2015, that could have allowed an attacker to mint XRP beyond its 100 billion supply cap in a single transaction. 
• An AI agent at Veria Labs, an AI security startup, discovered the flaw and the firm received Ripple’s maximum $250,000 bug bounty, while developers reported no evidence it had been exploited. 
• RippleX, Ripple’s engineering division, shipped the fix in xrpld 3.4.1 three days after the September 22 report, bypassing the usual two-week validator amendment vote and withholding the source code for roughly two weeks so the vulnerability would not be exposed.

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• Blockchain.com, a cryptocurrency wallet and trading platform, has applied to the U.S. Commodity Futures Trading Commission (CFTC) for a designated contract market license and futures commission merchant registration, seeking approval to offer prediction markets and crypto derivatives to U.S. customers.
• The company already provides prediction markets through Polymarket, a blockchain-based prediction market, and perpetual futures through Hyperliquid, a decentralized derivatives platform, to eligible international users, with CEO Peter Smith stating that users should be able to access these services "without jumping between different apps."
• Blockchain.com is also pursuing a U.S. initial public offering (IPO), reportedly targeting a $500M capital raise at a valuation of $4B-$6B, following its confidential filing and a separate agreement with the New York Stock Exchange to provide access to tokenized U.S. stocks and exchange-traded funds.

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• U.S. Treasury Secretary Scott Bessent said authorities expect to seize approximately $1B in cryptocurrency linked to Iran, stating "We know where it is and we are isolating them" as part of the Trump administration's broader economic restrictions against the country.
• Bessent did not identify the targeted wallets or clarify whether the $1B would be additional to previously reported seizures, while the U.S. Treasury Department has already sanctioned seven Iranian cryptocurrency exchanges and frozen approximately $130M in Iran-linked crypto assets as part of its enforcement campaign.

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• Kalshi, a U.S. federally regulated prediction market, is investigating three wagers that correctly anticipated President Donald Trump's selection of Katie Zacharia as White House press secretary, according to The Wall Street Journal, after the trades were placed before news outlets reported the appointment.
• The three bets totaled approximately $173 and are expected to pay out around $9,600, with Zacharia trading at roughly 1% implied probability before the announcement, raising questions about whether traders had access to nonpublic information.
• The investigation follows previous enforcement actions involving Kalshi markets, including a Commodity Futures Trading Commission (CFTC) settlement with a former White House teleprompter operator who agreed to repay $107,539 in trading profits and pay a $65,000 penalty for using advance knowledge of Trump's prepared remarks.

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• Justin Sun, founder of TRON, a Layer 1 blockchain focused on stablecoin payments, discussed stablecoins, tokenized assets and institutional adoption at TOKEN2049 Singapore and Blockworks Digital Asset Summit Asia, emphasizing their growing use in cross-border payments and access to U.S. dollar-denominated assets.
• Sun predicted that "AI agents using crypto will become the industry's biggest use case within the next five years," arguing that autonomous software will increasingly make payments, purchase digital services and manage financial transactions using blockchain infrastructure.
• Sun also highlighted TRON's preparations for quantum computing threats, stating that the network has deployed end-to-end post-quantum signature support on its Nile testnet, while TRON DAO reported more than 407M user accounts, 15B transactions, $28B in total value locked and $94B in circulating USDT.

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• Ledger, a cryptocurrency hardware wallet manufacturer, is investigating reports of stolen funds involving customers in Southeast Asia who purchased devices from CryptoBilis, an authorized reseller in Indonesia, Malaysia and the Philippines, with blockchain researchers estimating potential losses exceeding $86M across Bitcoin, Ethereum and Tron, although the total remains unconfirmed.
• Ledger has asked CryptoBilis to suspend sales and shipments and advised customers who purchased devices within the past 90 days not to initialize them, while those who have already set up their wallets should consider transferring assets to a new device with a newly generated recovery phrase.
• The cause remains under investigation, although Changpeng Zhao, co-founder of Binance, a cryptocurrency exchange, suggested a possible supply-chain attack involving counterfeit or tampered devices, while researchers continue tracing suspicious transactions and the number of affected wallets remains unknown.

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This Week's Calendar

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Charts of the Day

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Figure 1. Block Scholes BTC Risk-Appetite Index (white, left-hand axis) and BTC spot price (orange, right-hand axis).

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Figure 2. Block Scholes ETH Risk-Appetite Index (white, left-hand axis) and ETH spot price (purple, right-hand axis).

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Figure 3. BTC at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

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Figure 4. ETH at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

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Figure 5. BTC 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

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Figure 6. ETH 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

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