Daily Update:

• BTC's term structure remains steep, with a slight uptick at the front end in the past hours. In contrast, ETH's term structure is much flatter, with front-end vols trading 20 points above BTC’s.
• BTC’s perp funding rate remains positive, while ETH’s stays slightly negative, reflecting differing sentiment and a preference for leveraged long exposure in BTC.

• Meeting minutes from January’s FOMC meeting were released yesterday – clarifying the unanimous decision by members to hold rates at their current target range of 4.25-4.5%.
• “Many participants noted that the committee could hold the policy rate at a restrictive level if the economy remained strong and inflation remained elevated.”
• This was echoed by many participants who highlighted that “additional evidence of continued disinflation would be needed to support the view that inflation was returning sustainably to 2 percent”, despite stating that “the current target range for the federal funds rate may not be far above its neutral level.”

• Also noted by committee members was the rise in longer-term nominal Treasury yields since the Committee’s December meeting and after the release of the unexpectedly strong December payrolls report. We had recently commented on impacting risk-appetite in equities markets as well as crypto. However, the view we set out in that report was that Bitcoin is subject to several idiosyncratic factors that could see that correlation break.

• FOMC members also discussed a planned review of the Federal Reserve’s monetary policy framework – one in which Powell stated that “The Committee’s 2 percent longer-run inflation goal will be retained and is not a focus of the review” in the press conference for the same meeting

• The SEC has voluntarily dismissed its appeal of the lawsuit challenging its dealer rule expansion. This rule sought to redefine broker-dealers to include crypto liquidity providers, automated market makers (AMMs), high-frequency trading firms, and certain crypto hedge funds with over $50M in capital or a net worth of over $50 million.
• Nigeria has filed a lawsuit against Binance, seeking $79.5B in damages for alleged economic losses and $2B in unpaid taxes. The case blames the exchange for the country's currency troubles after crypto platforms became key venues for naira trading. This comes alongside previously detaining two of its executives in 2024.

• UMA, Polymarket, and EigenLayer have created a partnership to build a new prediction market oracle. This new oracle serves to better defend the system against bribery attacks and integrate AI into its offering. The project announced yesterday is currently in a research phase, collecting views from its users to better serve the community.

This Week’s Calendar:

Charts Of The Day:

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