Daily Update:

• As BTC and ETH spot prices slowly edge up higher, at-the-money volatility has continued to drop across all tenors for both, reaching as low as 35% for BTC at the front end of the term structure. ETH’s volatility remains higher with 7d-tenor options premium remaining at ~50%. 
• BTC perpetual funding rates continue their increase from yesterday, showing that market participants are seeking leveraged long exposure to BTC spot moves.

• Core inflation in Japan rose at its fastest pace since June 2023 (3.2% in January, exceeding the 3% in the previous month and economist expectations of 3.1%). 
• The headline year-over-year figure increased to 4% in January from 3.6%, largely pushed up by a 70.9% increase in rice costs as well as fresh food prices (up 21.9% YoY). 
• The CPI data also follows GDP growth data earlier in the week which came in higher than expected on a quarterly and annualised basis, rising 0.7% and 2.8%, respectively.
• The inflation data alongside strong GDP, strengthens the case for another rate hike from the BOJ, following an increase in January which brought the current rate to 0.5%. 
• Additionally, Kazuo Ueda, the BOJ Governor announced earlier today that the BOJ “will purchase government bonds nimbly … in exceptional cases where long-term yields rise sharply”. 

• Officials at Banco de México (Mexico’s Central Bank) have pledged to further monetary policy easing amidst uncertainty around President Trump’s tariff plans on Mexican export products (initially Trump had imposed a 25% tariff on Mexican goods before announcing a one-month delay on the measure). 
• According to yesterday’s meeting minutes from the February meeting, where the Bank lowered rates by 50bps to 9.5%, monetary policy has reached a “new stage”, with some members considering another rate cut in their March 27th meeting. 
• Additionally the minutes stated that “most members highlighted the risk associated with the possible effects of policies that could be implemented by the new US administration”. In particular, those members mentioned the “uncertainty related to the announcements of possible changes in trade and immigration policies”.

• Growth continues to slow down in the Eurozone. Today’s S&P PMI data showed manufacturing activity ticked up slightly, though remains in a contractionary zone (47.3 in February vs 46.6 in January) and services PMI fell by 0.6 to a three-month low of 50.7. 

DeFi:

• Franklin Templeton has launched the Franklin Crypto Index ETF (EZPZ), an ETF which currently gives exposure to both Bitcoin and Ethereum together, but has the flexibility to grow in exposure “as additional coins get added to the index” (should additional crypto-assets get regulatory permissibility). 
• The ETF utilises Coinbase as its custodian, and the initial allocation of exposure is 87% in Bitcoin and 13% in Ethereum. 

• Altvest Capital has become the first publicly traded listed company in Africa to have purchased Bitcoin in an effort to make the cryptocurrency its primary strategic treasury asset. 
• The company purchased one Bitcoin and has applied to South African regulators for permission to raise 200M rand ($10M) by selling shares to increase its stockpile. Additionally, the company cited Bitcoin as a “hedge against economic instability and currency depreciation, particularly the depreciation of the South African Rand”. This is a similar argument for why Michael Saylor adopted Bitcoin as a treasury asset at Strategy (that Bitcoin acts as a hedge against the US dollar). 

• Mansa, a company specialising in cross-border stablecoin payments, raised $10M to expand its services, following a $3M pre-seed round led by Tether. It aims to harness blockchain technology through on-chain payments for faster, cheaper, and more reliable global transactions.

• The European Central Bank (ECB) announced that they are developing a blockchain-based solution to enable financial institutions to settle transactions in central bank money. The initiative will follow a two-track approach: first, creating an interoperability link with TARGET Services for settlements, and second, exploring a long-term integrated solution to include international operations like foreign exchange settlements.

This Week’s Calendar:

Charts Of The Day: