Trade Deal Sparks Market Rally

Daily Updates:

• The past 24 hours saw a short but significant rally across crypto assets that pushed BTC from $107K back above $110K, and within inches of its all-time high. The second largest cryptocurrency by market-cap, ETH, has rebounded much further – up more than 6%, which has allowed the token to break out of the rangebound $2500 it had been trading around over the past week. 
• The moves in spot prices were able to lift the volatility premium in short-tenor BTC options back above 30%, with 7-day options currently trading with an at-the-money implied volatility of 33%. 
• The moves in implied volatility were more pronounced in ETH however – short-tenor volatility jumped 10 percentage points to 60%, resulting in a flatter term structure of volatility relative to BTC’s.
• BTC funding rates jumped to their highest levels since June 10 as the 8-hourly funding rate on perpetual swap contracts rose to 0.016% before falling slightly. As we have often seen this month, the response from ETH funding rates in comparison was much smaller (rising to just 0.005%).

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• Large US tech stocks rallied yesterday too, fueling gains in the S&P 500 and Nasdaq-100, both of which closed +0.47% and +0.73%, respectively. 
• The rally across asset classes coincided with yesterday’s announcement from President Donald Trump that his US administration had reached a trade deal with Vietnam. 
• The trade deal will see a 20% tariff on Vietnamese imports coming into the US, down more than half from the original 46% set out through the President’s April 'reciprocal tariff’ plan. ‘Transshipping’ products – i.e., products that come from other countries but pass through Vietnam will face a steeper 40% tariff. 
• US products sold in Vietnam will not be subject to any tariffs. 
• According to President Trump: Vietnam “will “OPEN THEIR MARKET TO THE UNITED STATES,” meaning that, we will be able to sell our product into Vietnam at ZERO Tariff”. 

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• Employment at US companies declined in June for the first time since March 2023, as ADP data showed private-sector payrolls fell 33,000 after a downwardly revised gain of 29,000 in May. No economists in Bloomberg’s survey had predicted a decline in employment, and the median forecast was for an increase of 100,000 for the month. 
• Nela Richardson, a chief economist at ADP said “Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month”. 
• A large part of the decline in payrolls came from service providers who reduced payrolls by 66,000 last month – primarily due to declines in professional and business services, as well as health care and education. 

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• Canada’s manufacturing economy continued to shrink in June, with the S&P Global Manufacturing PMI dropping to 45.6, marking the fifth straight month below the 50 no-change threshold. Output and new orders fell sharply – the steepest production decline over 5 years.
• Tariffs continued to exert significant pressure on demand, supply chain inputs and pricing. Export orders, especially from the U.S., plunged at one of the fastest rates on record. Rising uncertainty led to job losses and a notable pullback in purchasing activity, signalling ongoing headwinds for the sector. 

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• The REX-Osprey Solana Staking ETF (ticker: SSK) – the first U.S. - approved ETF offering direct Solana exposure with staking yields – posted $12M in first-day inflows and $33M in volume on its July 2 debut on the Cboe BZX Exchange, according to Bloomberg ETF analyst Eric Balchunas.
• Eric called it a “healthy start to trading,” with $8M in volume in just the first 20 minutes. Though well below the launch of spot BTC ETFs ($4.6B traded on day one), SSK’s performance far outpaced Solana and XRP futures ETFs.

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• BlackRock’s spot Bitcoin ETF (IBIT) has officially overtaken the firm’s iShares Core S&P 500 ETF (IVV) in annual revenue, according to Bloomberg.
• Despite managing a fraction of IVV’s $624B in assets, IBIT’s higher 0.25% fee structure is estimated to generate $187.2M annually – slightly ahead of IVV’s $187.1M on a 0.03% fee.

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• JPMorgan’s blockchain unit, Knexys, is piloting a new carbon credit tokenization platform in collaboration with S&P Global Commodity Insights, EcoRegistry, and the International Carbon Registry.
• The project aims to create a unified ecosystem to tackle market fragmentation and improve transparency for carbon credits – tradable permits tied to emissions reductions from projects like renewable energy and reforestation.

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• Swiss FINMA-regulated crypto bank AMINA has become the first bank globally to offer direct custody and trading of Ripple USD (RLUSD), according to an announcement today, July 3.
• Backed 1:1 with the US dollar and now reporting a market cap of over $440M, RLUSD is gaining traction among institutions seeking compliant stablecoin exposure.
• Ripple has applied for a national bank charter from the Office of the Comptroller of the Currency (OCC), aiming to operate under both federal and state (NYDFS) regulatory frameworks.
• Through StandardCustody, Ripple has also filed for a Federal Reserve Master Account to directly custody $RLUSD reserves with the Fed, enhancing reserve security.

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• The International Monetary Fund (IMF) has turned down Pakistan’s plan to offer subsidized electricity rates for crypto mining and other energy-intensive industries, citing concerns over further strain on the power sector and market distortions.
• Secretary of Power Dr. Fakhray Alam Irfan clarified no new charges had been introduced; the existing Debt Servicing Surcharge (DSS) of Rs 3.23/kWh will remain in place for the next five to six years.
• Despite this, Pakistan continues discussions with international institutions to refine the subsidy plan. 

This Week’s Calendar:

Charts of the Day:

Figure 1. BTC at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes

Figure 2. ETH at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes

Figure 3. BTC 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes

Figure 4. ETH 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes