BTC Drops With JGBs

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• How did options markets react to the crypto selloff?

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Market Snapshot: Overnight Moves

Daily Updates:

• Risk aversion grappled most corners of the market in the first trading session of the month as both US equities and cryptocurrencies sold off. 
• BTC first slid from above $90K to $85K during early morning trading in Tokyo, in line with a surge higher in Japanese government bond yields. The rally in JGB yields coincided with a hawkish signal from the BoJ Governor Kazuo Ueda that the central bank is weighing the pros and cons of a rate hike to tighten policy. 
• The initial decline in BTC foreshadowed the subsequent drop in US equities. The S&P 500 declined 0.53% yesterday, while the tech-heavy Nasdaq-100 Index ended 0.36% lower. 
• BTC also fell even lower as trading in New York began, dropping to $83K. 
• However, that level marked a local bottom for the session and it has since pared some of its losses, currently trading back above $86K. 

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• In options markets, traders have priced out some of their heightened vol expectations over the next seven days, as short-tenor volatility for BTC and ETH has dropped from peaks of 56% and 76% yesterday to 49% to 69%, respectively.
• Volatility smiles still remain skewed towards OTM puts, with options markets continuing to price in a more bearish outlook for BTC relative to ETH — 7-day put-call skew shows an 8 vol point premium towards puts over calls, relative to a 6 vol put premium in ETH, suggesting a higher demand for options to hedge downside exposure in BTC.

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• Interestingly, even amidst the bearish risk-off sentiment and the market pricing in a 87% probability of a 25bps rate cut in the Fed’s next meeting, US treasuries plunged sharply, seemingly following the move in JGB bonds. The yield on the 10-year treasury bond rose 8bps to 4.09%. 

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• Macro data in the US yesterday showed that factory activity shrunk in November by the most in four months, an indication that manufacturers in the US continue to operate in a slump driven by President Trump’s drastic rewrite of trade policy.
• The Institute for Supply Management’s Manufacturing Index fell 0.5 points to 48.2, the ninth consecutive month that the index has recorded a below 50 value indicating a contraction.

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• In prepared testimony dated 2 December for the House Financial Services Committee hearing, FDIC Acting Chairman Travis Hill said the agency plans to propose later this month an application framework to implement the GENIUS Act, with a further proposal on the Act’s prudential standards expected early next year.
• He added that the FDIC would supervise and license stablecoin-issuing subsidiaries of FDIC-supervised banks and set requirements around capital, liquidity, and reserve diversification, while also developing guidance on the regulatory treatment of tokenised deposits.
• Bloomberg reported on Monday that Vanguard is reversing its long-held stance on digital assets, responding to mounting pressure from both retail and institutional clients.
• Starting Tuesday, the firm will allow ETFs and mutual funds that primarily hold cryptocurrencies (such as BTC, ETH, XRP and SOL) to be traded on its platform, opening crypto exposure to more than 50M brokerage customers overseeing over $11T in assets.

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• Bitcoin digital asset treasury, Strategy has purchased a further 130 BTC for about $11.7M (approx $90,000) bringing its total holdings to 650,000 BTC.

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• Similarly, in the last week ETH-focused treasury firm BitMine Immersion Technologies has purchased a further 96,798 ETH. As of November 30th at 6:30 p.m. ET, the company reported that its crypto portfolio includes 3,726,499 ETH valued at $3,008 per coin, along with 192 BTC, a $36M position in Eightco Holdings (NASDAQ: ORBS) and $882M in unrestricted cash. 
• Altogether, BitMine’s assets total roughly $12.1B. The firm now controls more than 3% of the entire ETH supply, placing it about two-thirds of the way towards its goal of owning 5% of the total Eth supply.

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This Week’s Calendar:

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Charts of the Day:

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