Trump and Musk Take It Public

Daily Updates:

• The crypto market is in a sea of red amidst a public feud between President Trump and Elon Musk.
• BTC briefly approached the $100K mark, before bouncing off 101.6K, and now changes hands just shy of $103K.
• Implied volatility levels across the term structure briefly shot up for BTC, led by moves at the front-end – the 7-day tenor temporarily traded with an implied volatility of 40%, but those increased volatility expectations have since abated to 36% and was not enough to invert the term structure of volatility. 
• We also don’t see a major impact on volatility smile skews, which still maintain their slight tilt towards OTM puts for 7- and 14-day tenors. Funding rates for BTC have dipped below 0%, currently at –0.003%, and futures-implied yields dropped from above 6% to 4.5%. 

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• Spot and derivatives markets moves for ETH were more pronounced however. ETH’s spot price has shed more than 5% in the past 24 hours, and a similar spike in front-end vols to BTC resulted in an inverted term structure of volatility – that proved temporarily only and has since flattened. 
• Since March 2025, we have seen the ratio of at-the-money implied volatility for 7-day ETH options relative to their BTC counterparts increase from 1.2 to upwards of 2 – that is, the ATM volatility for ETH options has increased relative to BTC options, and a reflection of ETH’s continued term structure inversion, relative to a flatter slope seen for BTC.
• The 7-day ETH skew has markedly turned more bearish, with 25-delta OTM puts carrying nearly a 4 vol premium to similar OTM calls. 
• Perpetual funding rates have also plunged for ETH from 0.014 towards 0, though have not yet turned negative.

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• Musk and Trump’s public social media arguments stem from comments made by the Tesla CEO in late May when he said “I think a bill can be big or it can be beautiful … But I don’t know if it can be both. My personal opinion.” Speaking to CBS News, Elon also said that he was “disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing” – that came a day before he stepped down from his role in the White House. 
• Since then, Musk has made a number of posts on X criticizing President Trump and his tariff policies saying “The Trump tariffs will cause a recession in the second half of this year”.

• In another post, Musk replied “Wise words” to an old tweet from President Trump that read “I cannot believe the Republicans are extending the debt ceiling–I am embarrassed!” – that comes after Trump said “The Debt Limit should be entirely scrapped to prevent an Economic catastrophe” on May 30, 2025.

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• US equities fell along with US treasuries in the midst of the online squabbling. Tesla shares collapsed 14%, the Nasdaq-100 shed 0.8% and the S&P 500 ended the day down 0.5%.
• Those moves completely reversed the earlier gains in US equities which came after Trump said he had a “very good” call with President Xi of China. 

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• Shares of Circle Internet Group, the issuer of the second-largest stablecoin by market-cap, USDC, rose as much as 235% yesterday. The stock ended the day at +168% after the company’s $1.1B IPO. That makes it the first ever public debut by a stablecoin firm in the US. 
• Shares climbed as high as $103.75 apiece yesterday, compared to the IPO price of $31.
• According to Bloomberg, based on the IPO price, Circle has a market value of $6.9B – that compares to revenues and reserve income totaling $578.6M in the first three months of the year. Reserve income refers to the returns Circle makes on the cash it holds in banks and treasury bills it invests in, that backing the USDC stablecoin.
• Trump Media and Technology Group has officially filed an S-1 with the SEC to launch the Truth Social Bitcoin ETF yesterday, June 5. The ETF is expected to list on NYSE Arca.

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