Don’t Discount ETH Just Yet

Daily Updates:

• Risk-on momentum engulfed financial markets yesterday and continues to push crypto markets higher today. Equities and crypto assets caught a bid, while US treasuries sold-off, once again pushing yields up across the entire curve. 
• The prevailing risk appetite came after President Trump announced the first trade deal made by his administration – a trade deal with the UK – that comes as we approach day 30 of Trump’s 90-day reciprocal tariffs pause. 
• Speaking at the White House, President Trump also told investors “You better go out and buy stocks now. Let me tell you. This country will be like a rocket ship that goes straight up. This is going to be numbers that nobody’s ever seen before”. 

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• In reference to the current tariffs on China, Trump said “You can’t get any higher, it’s at 145%, so we know it’s coming down” and that “I think we are going to have a good weekend with China, I think they have a lot to gain”. Those signs of easing trade tensions were enough for US equities to dutifully find a rally, though some of those gains were pared back before the trading session ended. The Nasdaq-100 ended the day up 0.98%, while the S&P 500 rose by a smaller amount of 0.58%. 

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• The biggest moves were in crypto spot markets, however. ETH in particular has outperformed the rest of the market in the past 24 hours – up over 23% and now targeting the $2.4K level – that’s something our Senti-Meter Index had pointed towards on the 3rd of May (see in Charts Of The Day). It's also the largest single day gain for ETH since May 2021 and comes after the successful rollout of the Pectra upgrade on 7th May at approximately 10.05UTC. 

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• The broader backdrop of risk-on sentiment has allowed ETH to finally show signs of catching up after lagging behind BTC and many other Layer-1s for most of this entire crypto cycle. 
• BTC rallied straight through $100K yesterday for the first time since early February and is now trading at $104K – only inches away from its January ATH – while even after a 20% rally, ETH is still 50% lower than its 2021 cycle top of $4.8K.

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• We covered in yesterday’s daily comment that options markets seem to be discounting the probability of BTC reaching $100K – that turned out to be right as we blew straight through those levels. 
• After a slight delay, derivatives markets are now backing the rally in spot price, however implied volatility still remains low, suggesting traders may not be seeing $100K as strong of a key psychological threshold that they had only a few months back. 
• BTC at-the-money implied volatility across tenors has risen slightly with long-tenors maintaining their lift – though the moves at the front-end were not enough to invert the term structure, as have previously been attributed with major spot rallies. Volatility levels for short-tenors trade around 30 points lower than they did the first time we reached $100K back in December 2024. 
• The put-call skew ratio did have a more meaningful response however – briefly touching 5.56% towards OTM calls, however that quickly dropped off and is now below 4%, which is still a strong indication of traders willing to bet on some further upside. 
• Funding rates for BTC also jumped to 0.024%, their highest since mid-February. 

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• Derivatives markets moves in Ethereum however have been significantly more bullish – implied volatility for short-tenors have shot up nearly 20 points in the past 24 hours, which has shaped the term structure into a strong inversion. The put-call skew ratio has gone from firmly negative only three days ago, now strongly tilting towards OTM calls by 7%. Futures yields for ETH are now firmly positive too. 

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• ETH’s Pectra upgrade is also showing immediate effects for users on the Ethereum blockchain. The upgrade allows validators to consolidate their operations by increasing the staking limit from 32 to 2,048 ETH (via EIP-7251), increases max blob space by 50% to increase the scalability of the network and finally has pushed the network closer to account abstraction – the process by which smart contract accounts on Ethereum can initiate and execute transactions without needing an externally owned account.
• Many wallet applications have already begun taking advantage of these features: Trust Wallet now allows users to pay for gas fees on Ethereum using stablecoins and other tokens instead of purely Ether.

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• Altcoins also followed suit with XRP, SOL and ADA recording overnight gains of 7.3%, 8.9% and 11.4% respectively.

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• Sui has partnered with Axelar to support multichain tokenisation. This integration enables asset issuers on Sui to utilise Axelar’s Interchain Token Service (ITS), to move tokens across multiple blockchains. 

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• Bolivia’s central bank is currently working on designing a national digital currency – referred to as the “virtual boliviano,” aiming to facilitate international settlements.
• Central Bank President Edwin Rojas Ulo confirmed the initiative, noting that the country is consulting with international bodies and studying global precedents. 
• The digital currency is expected to be unveiled during Bolivia’s bicentennial celebrations on August 6, marking a strategic move in the broader trend of de-dollarisation and modernization of payment systems.

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• Arizona has enacted House Bill 2749, establishing the state’s first crypto reserve fund. It is designed to manage unclaimed cryptocurrencies acquired through escheatment.
• Missouri lawmakers have approved a major tax reform bill that exempts both crypto and stock capital gains from state income tax, sending it to Governor Mike Kehoe for the final approval.
• The bill, which applies retroactively to gains made in 2025, is expected to reduce state revenue by $430M this fiscal year and $340M annually thereafter.

This Week’s Calendar:

Charts of the Day: