The illiquid Christmas period continues as the S&P 500, Nasdaq, and Dow Jones barely moved yesterday. U.S. Treasury yields on the longer-end of the yield curve did ease slightly however, with 10Y tenors dropping in yesterday's session. After 4 consecutive trading days of strong outflows, the Spot BTC ETFs finally recorded net inflows of $475.2M. Derivatives metrics largely reflect the same sentiment as they did yesterday with BTC and ETH's at-the-money volatility term structure largely unchanged. Both majors' volatility smiles indicate continued cautiousness in the short-term with long-run expectations for a continuation of the bull-run.
As we have seen so far in the illiquid Christmas period, Thursday’s TradFi performance was another quiet one. The S&P 500, Nasdaq, and Dow Jones all barely moved as market participants seemed eager to hold their positions as is before the New Year. U.S. Treasury yields on the longer-end of the yield curve did ease slightly – 10-year yields recently rose to their highest this year since May, peaking around 4.64%, following Chair Powell’s more hawkish outlook on 2025. However, as the chart below shows, whilst the 2Y maturities have stayed flat, 10Y tenors dropped in yesterday’s session.
Figure 1. U.S. Treasury Yield Curve across various maturities, with a colour gradient indicating progression over time (lighter red for earlier dates, darker red for more recent dates). Source: U.S. Department of the Treasury
Russian Finance Minister Anton Siluanov stated on Russian television that domestic companies are increasingly embracing bitcoin and other digital currencies for international payments, as a means to bypass Western sanctions. Siluanov stated that "as part of the experimental regime, it is possible to use bitcoins, which we had mined here in Russia" and such transactions should be further “expanded”. This follows comments from President Putin earlier in the month that questioned who can regulate or ban Bitcoin.
On that note, after a brief dip in the early morning of today where BTC fell from $96K down to $94K, it is currently trading around $95.6K. ETH is slightly up on the day too, though prices across the market are largely subdued – if TradFi isn’t looking to make any bold moves before the year closes, it appears the crypto players aren't either.
After 4 consecutive trading days of strong outflows, the Spot BTC ETFs finally recorded net inflows – and they were relatively large too, at $475.2M. Unlike many of the previous cases of strong inflows where it was BlackRock’s IBIT leading the charge, this time the buying was largely from Fidelity’s FBTC and the ARK 21Shares Bitcoin ETF. Investors didn’t shy away from Ethereum either – Ether Spot ETF funds managed to pull inflows of $117.2M, continuing on the positive net flows we’ve seen all week so far.
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President Donald Trump finally announced his reciprocal tariff plans, which will see the US apply a baseline 10% tariff on all exporters to the country, with customised duties on top of that baseline. Trump has promised “these tariffs will give us growth like you haven’t seen before". Financial markets have not reciprocated that sentiment however. US equity futures had fallen as much as 4% within the announcement with BTC moving in the same direction. With it, its term structure of volatility briefly inverted. Short-tenor skews have once again crashed down towards puts, with demand lop-sided towards further protection against downward moves. For BTC, only tenors above 4 months hold a premium towards calls.
A slew of weaker economic data from the US continues into this week as the ISM Manufacturing Index, JOLTS, and S&P Global Manufacturing PMI readings all came in below expectations. Despite those weaker readings, US equities ended the day higher. Treasuries options markets show the 1-month tenor 25-delta put-call skew ratio for the 10Y, 5Y and 2Y treasury notes are at their highest levels towards calls since August 2024 and in crypto options markets, ETH's term structure still remains inverted. In DeFi, stablecoin issuer Circle has filed for an IPO in the US.
With "Liberation Day" on the horizon, assets across the board went through a whirlwind of prices yesterday. The S&P 500 and Nasdaq-100 both dropped sharply at their opening, before paring those losses back. Crypto derivatives markets saw much of the same rollercoaster moves with implied volatility levels having plunged down following their explosion upwards yesterday. That has resulted in a flatter term structure for BTC compared to yesterday, whilst ETH's term structure is still inverted. That drop in volatility comes as BTC spot price and ETH spot price currently trade 2% and 4% higher on the day. Separately, Eric and Donald Trump Jr. have partnered with Hut 8 to launch a large-scale U.S. bitcoin-mining venture named American Bitcoin.