S&P 500 Sets Record Close as BTC Slips Below $84K

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In Today's Note

• The S&P 500 rose 0.58% to a record close of 7,818.93 on gains in AI and chip stocks as Treasury yields briefly eased from 2002-level highs, while BTC fell 2.4% to $83.9K and ETH dropped 3.9% to $2,609.
• Polymarket began testing its rebuilt Protocol V2, Brevan Howard selected Ripple Prime for multi-asset brokerage, and Pudgy Penguins parent Igloo said its Ethereum Layer 2 Abstract will shut down on Dec. 15.

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Market Snapshot: Overnight Moves

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Macro & Markets

• US equities reached a new all-time intraday high yesterday as the S&P 500 was boosted by gains in key large technology names as well as a short-lived decline in longer-term Treasury yields.
• The S&P 500 climbed 0.58% for a record close of 7,818.93, while the tech-heavy Nasdaq-100 gained 0.48% reaching a new all-time high during the session also. 
• The moves higher were bolstered by gains in a number of AI-related firms and chipmakers, as Marvell Technology rose 5.8% and Advanced Micro Devices rallied close to 3%, while Broadcom advanced 3.7%.
• BTC on the other hand struggled to keep up with the move in US equities markets, consolidating between $85K and $86K for most of the day before dropping in Asian trading hours earlier today to below $84K.

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• US Treasury yields temporarily fell from the 2002-level highs they reached on Monday, aided by a drop in oil prices below $100 a barrel and amidst comments from Treasury Secretary Scott Bessent that the US government’s debt load can be controlled.
• 30-year yields briefly fell intraday from 5.67% to 5.62% yesterday, but have since risen back to 5.7%. The yield on the 10-year bond saw a similar move, declining from 5.31% to 5.25% before climbing back up past 5.3%. 

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• Speaking at a fireside chat in Pennsylvania, Bessent tried to reassure investors that a combination of economic growth and spending restraints will “very quickly” start to rein in the federal deficit.
• According to Bessent, the Trump administration is doing two things after having inherited “a big stack of debt”, one of which was “constraining spending and growing the economy”, to which he pointed to a resumption of higher tariff revenue. 
• He added that “What is important is the debt-to-GDP, and we will start bending that curve and bringing it down. It could happen very quickly.” 
• Consistent gross domestic product growth in excess of 3%, a target estimated to have been reached for Q3 will help in that goal, according to Bessent.

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• His comments come after a recent interview with Axios where he said “I would be concerned if we were having some kind of idiosyncratic rise. It’s been a global rise … so we’re not seeing people sell Treasuries to buy German bonds or Japanese bonds and like I said, I can’t control the bond market. What I can do is try to get people to slow down and think”. 
• In that same interview he claimed the “House doesn’t win every hand. The House plays the percentages” and “wins over time”, a reference to a comment he made in September where he told investors “I have asymmetric information. I am the House now. You can bet against me if you want”. Those comments were in reference to the Treasury’s intervention in yen markets and efforts to contain a rise in Treasury yields. 

Defi/ Crypto

• Polymarket, a blockchain-based prediction market, has started testing Protocol V2, a rebuilt smart-contract system that replaces its older Conditional Tokens Framework with a single ERC-1155 positions contract, a token standard that can manage multiple market positions within one contract, and pUSD as collateral.
• The new setup initially supports four market types, namely Binary, Atomic Neg-risk, Incremental Neg-risk and Combinatorial, and adds an OracleAggregator, a system that can pull outcome data from providers such as UMA and Chainlink to determine how markets should settle.
• Polymarket plans to run these canary markets through Oct. 30 and tentatively use Protocol V2 for new markets from Nov. 2, with the architecture also designed to move positions, collateral and market resolutions across different blockchains in the future.

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• Brevan Howard, a global hedge fund managing about $35B, will use Ripple Prime, Ripple’s institutional prime-brokerage platform, for multi-asset brokerage, clearing and financing across its funds.
• The agreement expands an existing relationship that already includes Brevan Howard’s investment in Ripple and its participation in Ripple’s $500M strategic funding round last year, while Ripple Prime itself was created after Ripple acquired institutional prime broker Hidden Road.

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• DeFi Development Corp., a Nasdaq-listed Solana treasury company, authorized an open-ended program to repurchase its CHAD preferred stock if it trades below its $10 par value, covering both existing shares and any issued in the future.
• The company said it does not currently plan to buy back CHAD and first wants the security to trade around $10, while keeping the repurchase authority available alongside its $300M at-the-market CHAD program, which it uses to raise capital for additional SOL purchases.

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• Conduit, a cross-border payments company that uses stablecoins to move money internationally, has sued Tether, the issuer of USDT, over a $2.76M freeze on a treasury wallet that Conduit says functioned as its operating bank account.
• Conduit says the freeze was linked to a Brazilian police investigation involving former customer Onix Intermediações, but argues that Brazilian authorities never identified Conduit’s wallet for seizure and that a court confirmed Conduit itself was not under investigation.
• The company is asking a U.S. federal court to order Tether to release the $2.76M in frozen USDT and is seeking at least another $2.76M in damages and profits, arguing that Tether had no legal right to retain the funds.

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• Abstract, a consumer-focused Ethereum Layer 2 network backed by Igloo Inc., the parent company of Pudgy Penguins, will shut down on Dec. 15 after stagnant growth, limited liquidity and institutional adoption made the network financially unsustainable despite onboarding more than 400,000 users and 144 apps.
• Igloo funded Abstract for 18 months and lost “tens of millions of dollars,” according to Chief Executive Officer Luca Netz, who said the company rejected launching an Abstract token or initial coin offering to finance continued operations because it lacked confidence there would be sufficient demand for the token.
• Users must bridge their assets from Abstract to another blockchain before the shutdown to retain access to their funds, while Igloo will redirect resources toward Pudgy Penguins, its NFT and consumer brand, and PENGU, the brand’s cryptocurrency.

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This Week's Calendar

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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