“People see the picture pretty similarly but see the risks quite differently.”

Find out our latest reports, listed below:

• DeepBook - “The Backbone of Sui DeFi Liquidity”

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• Premia x Block Scholes: Introducing Kyan

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• Bybit x Block Scholes Quarterly Report: Rise of Perp DEXs — and how to catch the opportunity

• How did options markets react to the crypto selloff?

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Market Snapshot: Overnight Moves

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Daily Updates:

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• As widely expected, the FOMC cut its benchmark federal funds rate for the third time this year, by ¼ percentage point to 3-1/2 to 3-3/4 percent. 
• It was the fourth consecutive vote, however, that had not been unanimous, as three voting members dissented: Governor Miran opted for a 50bps cut, while Chicago President Goolsbee and Kansas City President Schmid both preferred no change — that made it the first meeting since September 2019 to see three dissents. 

• Chair Powell was quick to dismiss the dispersion of views — he said “people see the picture pretty similarly but see the risks quite differently.” That is, “everyone around the table at the FOMC agrees that inflation is too high … and agrees that the labour market has softened”, but the difference in views reflects how “you weight those risks, and what does your forecast look like, and ultimately where do you think the bigger risk is?”
• The December SEP provides some insight into that latter question: the median dot calls for only one rate cut in 2026, unchanged from the September dot plot. 
• However, four members believe there should be two cuts in 2026, another four see more than two cuts, while one member believes a total of six quarter point reductions next year would be appropriate. On the other hand, four officials believe no change in 2026  should be appropriate, while three see rates higher by the end of 2026 as the appropriate path. 
• Even so, the CME FedWatch tool continues to indicate nearly a 40% probability of another quarter-point cut by March.

• Overall Chair Powell struck a moderately hawkish tone throughout his presser. On the more hawkish side, Powell emphasised the term “we are well-positioned to wait to see how the economy evolves” in at least three different points in the conference.   
• Additionally, another comment that Powell made to suggest the Fed may hit the brakes temporarily in upcoming meetings, was at the start of the Q&A when he said “The adjustments to our policy stance since September bring it within a range of plausible estimates of neutral”. He later added however, “We’re in the high end of the range of neutral”. 

• Some of the hawkish comments were also countered by his views on the labour market and inflation. Powell said “the labour market has continued to cool gradually” and that there has been “something of a systematic overcount” in jobs market data that the Fed needs to take into account. 
• On inflation, he said “more than half the source of the excess inflation is goods” and that “goods inflation is entirely in sectors where there are tariffs”. As such, “if you get away from tariffs, inflation is in the low twos”. 
• The Fed also announced the restart of Treasury bill purchases, beginning with $40B in bills on 12 December, which Powell characterised as “reserve management purchases” that are “completely separate from monetary policy.”

• The market reaction was mixed. The S&P 500 closed 0.67% higher, within hairs of its all-time high, while the Nasdaq-100 ended the day up 0.42%. 
• The rally in equities may have been supported by optimism from Powell and the SEP on the strength of the US economy and its drivers. The median projection for real GDP by the end of 2026 was revised up to 2.3%, from September’s 1.8%. Powell also said the higher growth forecast is “partly that consumer spending has held up …  And to another degree it is that AI, spending on data centers and related to AI, has been holding up business investment.” 
• BTC also initially rallied following the announcement of the cut, touching an intraday high of $94.5K, but through the rest of the evening and into early Asian hours, it has subsequently slowly descended and now hovers just above $90K. 
• That drop from the intraday high coincided with a disappointing after-market-hours earnings report from Oracle Corp, another company closely attached to the AI boom narrative. 
• Shares of the company fell more than 10% in extended trading yesterday, after both fiscal second-quarter sales and revenue fell short of analyst estimates. That dragged futures contracts on both the Nasdaq-100 and S&P 500, which were down more than 1% earlier today. 

• The term structure of implied volatility for both BTC and ETH has moved after yesterday's FOMC meeting. 7D BTC IV now trades near 40%, compared with 46% for 180D, while ETH trades higher in absolute terms with 7D IV around 67% compared to around 70% for 180D.
• ETH skews are also negative, with short-dated tenors near -6% meaning OTM puts trade about 6 vol points over OTM calls. 

• BitMine, the Ethereum-focused treasury firm, has reportedly added a further $112M of ETH to its balance sheet via FalconX on Wednesday. 

• State Street and Galaxy Asset Management plan to launch the State Street Galaxy Onchain Liquidity Sweep Fund (“SWEEP”) in early 2026, a tokenised liquidity fund that will initially run on Solana and use Paxos-issued PYUSD to support 24/7 subscriptions and redemptions for qualified institutional investors.
• The fund, seeded with around $200M from Ondo Finance, is designed to replicate traditional cash-management sweep products on public blockchains, offering cash-like exposure while maintaining the intraday liquidity profile institutions expect.
• Over time, SWEEP is expected to expand beyond Solana to additional networks such as Stellar and Ethereum, with Galaxy using Chainlink infrastructure for cross-chain data and asset movements.

• Valora has announced that its team will be joining Stripe, in a move framed as the “next chapter” in its mission to expand global access to financial opportunity.
• Founded to make it easier for anyone with a mobile phone to move value, access digital assets and save, Valora has focused on using stablecoins and crypto rails to improve financial inclusion, particularly where legacy systems are fragmented or inaccessible.
• The Valora app itself will live on under the stewardship of cLabs.

• Crypto exchange Gemini Space Station received CFTC approval to operate a Designated Contract Market yesterday, 10 Dec, enabling the launch of Gemini Titan, a regulated prediction venue that will start with binary “yes/no” contracts on future events and potentially expand into crypto futures, options and perpetual swaps. 

• At Solana Breakpoint, Coinbase unveiled Solana DEX trading directly on Coinbase. Tokens with on-chain liquidity become instantly accessible to a global user base, with liquidity sourced directly from Solana DEXs.
• This means projects no longer depend on centralised exchange listings and users can gain immediate access to newly listed Solana assets on the Coinbase app.
• Additionally, Coinbase is broadening native Solana integration within its platform, allowing users to trade tokens using USDC, bank accounts, or debit cards, with tokens delivered straight to users’ wallets.

• Ellipsis Labs has announced the launch of a new Solana-native perpetuals DEX, Phoenix Perpetuals. The DEX will be fully on-chain, including the risk and matching engine and is designed to provide gasless trading for retail users.
  

This Week’s Calendar:

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Charts of the Day:

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