Crypto Markets Daily Jan 02 2025

New Year, New Momentum?

The year starts green with a New Years rally across crypto – in the last 24hours BTC is up 3.7% to $96.5K, ETH is up 4.4% to $3.5K and XRP is a stand-out +15% to $2.40, marking a fresh start for all following the slightly bearish end to 2024. XRP had extra leverage for a rally with a mysterious bullish memo attached to Ripple’s monthly Jan 1st, 2025, escrow execution -  “January 20 is around the corner. Donald Trump will be in the WH, and we are going to make crypto great again!”. 

Uniswap +10% (24h) also posted on X that “V4 is coming soon”. This refers to their latest upgrade of the DeFi protocol which has been pushed back from a previous launch expectation of Q3 2024.

Perpetual swap markets were indicating a return to a more bullish outlook even ahead of the New Year’s rally we are seeing today, marking a particular departure from the depressed funding rates we saw through much of the mid-end December period. Since the 30th of December, as the chart below shows, the funding rate for BTC has risen to 0.4%.

We have also seen a rally in short-tenor futures yields since the end of December and start of the New Year. Though levels are still significantly below their upper-range of last month, around the 4th of December when Chair Powell likened Bitcoin to “digital gold”, we are beginning to see signs of traders once again expressing a willingness for long exposure.

Options markets have changed their tide too – only a few days ago, BTC’s short-tenor volatility smiles were slightly skewed towards OTM puts whilst longer-tenors exhibited a slight bullish preference; now we see a different picture with all tenors being skewed towards calls.