The Art of the Deal

Daily Updates:

• After weeks of tit-for-tat tariffs between the two largest economies in the world, on Monday morning the US and China announced that they will lower tariffs for 90 days following a two day negotiation in Geneva, where Bessent cited “substantial progress had been made” between both sides. 
• US levies on Chinese imports (which had risen to 145%) will now be reduced to a baseline 10%, plus an earlier 20% fentanyl related tariff, for a total of 30% from May 14. China, on the other hand, has agreed to lower Chinese duties on US goods to 10%, from a previous 125%. 

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• The long-awaited detente in the trade war has sent risk-on equities soaring. S&P 500 futures are up by 2.5%, while Nasdaq-100 futures were briefly trading 4% higher. Markets had already been bolstered last week by the US’s first trade deal announcement with the UK, but that optimism quickly faded given that the US already has a trade surplus with the UK. 

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• BTC reacted first to the weekend developments, rallying to $105K, when President Trump posted on Truth Social “A very good meeting today with China. GREAT PROGRESS MADE!!!”. Then, after paring some of those gains, it shot up again past $105K earlier today on the confirmation of the trade deal.

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• Since reaching a local bottom of 35% on May 2, BTC implied volatility for short-tenors has slowly trended up 10 percentage points and volatility smiles continue to be skewed 3% towards OTM calls. 
• However, as we noted in last Friday’s daily comment, ETH spot and derivatives markets have seen a much stronger reaction. ETH is currently trading close to $2,600, up 3% on the day with a term structure that is still considerably inverted. Front-end volatility for ETH trades with nearly a 2x volatility premium compared to BTC short-tenor volatility, while smiles are skewed with even stronger bias towards call options at 4.8%. 

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• The flight away from safety has seen gold drop as much as 3.2% over the past 24 hours – trading close to $3,200/ oz. It has also seen the 10Y treasury yield surge 7bps overnight to 4.45%, its highest level in just over a month.
• The recent divergence between gold prices and BTC comes as BlackRock’s Spot Bitcoin ETF (IBIT) – the largest BTC ETF (625,000 BTC in holdings) – has recorded nearly $7B in net inflows since the start of 2025, allowing it to surpass the SPDR Gold Trust ETF to become the sixth most popular ETF by inflows year-to-date.
  
  
• Tokyo-based investment firm Metaplanet has acquired an additional 1,241 BTC for approximately $126.7M, pushing its total holdings to 6,796 BTC – more than El Salvador’s 6,174 BTC. 
• This marks a major milestone for the company, often dubbed “Asia’s Strategy” due to its aggressive BTC accumulation strategy modeled after U.S.-based software firm MicroStrategy.
• Metaplanet’s total BTC accumulation strategy is now valued at $706.7 million. CEO Simon Gerovich celebrated the achievement, stating, “From humble beginnings to rivaling nation-states, we’re just getting started.”

This Week’s Calendar:

Charts of the Day: