Trade Truce, Crypto Test

Daily Updates:

• Yesterday President Trump stated “we’re leading China by a lot, and in crypto we’re leading China by a lot”. 

• The rebound in risk appetite of the past three weeks appears to have met some stumbling blocks however. After rallying 18% from April’s lows, the S&P 500 ended yesterday close to flat (+0.1%), while today, cryptocurrencies across the board trade lower. BTC is trading at the lower bound of a recent $100-105K range, while ETH is down 3%, trading slightly above $2,500. SOL has dropped off 5% over the past 24 hours, and is now trading at $170. 

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• Short-tenor BTC implied volatility is approaching its lowest levels for the month, with 7-day tenor IV slightly below 35% – a level we have consistently seen implied volatility bounce off from over the past 18 months. ETH’s term structure of volatility is approaching a flat shape, following an inversion on May 11, that saw front-end volatility reach as high as 87%. ETH volatility smile skews have seen an even more aggressive shift in sentiment as spot price trades lower – short-tenor smiles which were skewed more than 6% towards OTM calls, only yesterday, are now close to neutral (0.37%), though longer-tenors are still exhibiting a bullish outlook.

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• The US treasury market is also once again proving to be a point of vulnerability for President Trump’s administration. The 10Y treasury yield advanced 7 bps to pass 4.5% yesterday. The last time the 10Y treasury yield breached those levels intraday, President Trump shortly thereafter announced a 90-day pause to his reciprocal tariffs program, citing that “the bond market is very tricky, I was watching it but if you look at it now it’s beautiful… but I saw last night where people were getting a little queasy”. While in a later interview, Trump said the tariff pause had nothing to do with the bond market selloff, with long-term yield back above 4.5%, it is once again in contention with one of the administration’s stated goals of a lower 10Y yield. 

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• Sui network has announced a new partnership with crypto asset manager 21Shares to collaborate on product development, research, and other strategic initiatives. This collaboration aims to further institutional engagement with the Sui ecosystem.
  
  
• JPMorgan has taken a key step towards bridging traditional finance and decentralized finance (DeFi) by settling a transaction involving tokenized U.S. Treasuries on Ondo Finance’s public blockchain.
• The bank used Chainlink to coordinate the exchange between its private and the public network. The experiment marks the newest advancement in JPMorgan’s DeFi initiative, Kinexys, a platform to connect traditional finance with DeFi.
• has executed its first public blockchain transaction, settling the purchase of tokenized U.S. Treasures via Ondo Finance using Chainlink’s communication protocol.
• The deal managed by its blockchain unit Kinexys, bridged JPMorgan’s private blockchain with Ondo’s public ledger, highlighting a major shift from the bank’s historically closed “walled garden” approach.
  
  
• VanEck has introduced the Onchain Economy ETF, listed under the ticker $NODE, aiming to provide investors exposure to companies within the blockchain and digital asset sectors, that are focused on driving adoption and infrastructure development. 
• This launch intends to provide investors with exposure to the expanding market of companies that are driving the growth of digital assets and the wider onchain economy.
  
  
• Brazil is moving forward with comprehensive crypto regulatory reforms as stablecoins now account for roughly 70% of crypto transactions in the country. 
• The Central Bank of Brazil (BCB) is currently rolling out a phased effort to regulate digital assets within the country’s financial system. Following its first public consultation in early 2024, the BCB is preparing a second round for later this year, focusing on operational rules for VASPs and authorization processes.
  
  
• The U.S. Senate may vote on the revised GENIUS Act—legislation focused on stablecoin regulation—by Memorial Day, according to Sen. Cynthia Lummis. Speaking at a Stand With Crypto event alongside Sen. Kirsten Gillibrand and Coinbase CEO Brian Armstrong, Lummis said late May is a “fair target” for a floor vote. 
• Gillibrand said the revised bill will include better protections for consumers and clearer rules around bankruptcy and noted that it may no longer contain language referencing President Trump’s crypto involvement — a sticking point that had previously held up negotiations.

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This Week’s Calendar:

Charts of the Day: