Trump Trade Reverses

Find out our latest reports, listed below:

• 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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• Metaplanet Is Selling Vol, Who Is Next?

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Market Snapshot: Overnight Moves

Daily Updates:

• After falling to $100K yesterday, Bitcoin has continued its plight lower and has now settled at $97K, amidst a sweep of risk-off sentiment across financial markets. 
• Over the past 24 hours it's down 5.4%, and down 23% from its October high. 
• Additionally, BTC now trades negative relative to President Trump’s January 20 inauguration date, and only +3% year-to-date.  

• ETH has fared far worse, dropping nearly 9% in the last 24 hours to below $3,200, bringing it 36% lower than its ATH in late August 2025. 
• The selloff has also coincided with the second largest single-day outflow from Spot Bitcoin ETFs since their launch back in January 2024. Cumulative net flow in yesterday’s trading session amounted to -$866.7M, second only to the $1.1B outflow on 25 Feb, 2025. 
• In derivatives markets, we see the classic signs of panic and bearish sentiment that we would expect given the size of the moves in spot prices over the past day. Short-tenor ETH ATM volatility has outperformed, shooting up towards 76%. That’s 6 vol points higher than the volatility implied by 180DTE options, resulting in another term structure inversion. 
• That inversion is accompanied by a further decline in ETH front-end skew, with the 25-delta put-call skew now trading at -6.2%. That shows options markets are now bracing for higher volatility in terms of a relief rally or bounce, but positioning for higher downside vol. 
• A similar negative sentiment is shown in BTC’s vol smiles too — across the curve, the put-call skew ratio is negative. 
• Funding rates on perpetual swap contracts are yet to turn negative, though remain at modestly neutral levels, while 7-day futures yields for BTC and ETH are firmly negative, another classic sign of bearish positioning in futures markets. 
• Even despite the largest liquidation clearout in crypto history last month, we saw more than $1B in positions wiped out in the past 24 hours: $980M of that total included the forced closing of long positions, according to Coinglass. 
• Crypto was not the only affected asset class yesterday however. After a small relief bounce earlier in the week driven by the end of the longest government shutdown on record, optimism in US equities faded yesterday too. 
• Large bouts of selling pushed the S&P 500 to close 1.6% lower while the Nasdaq-100 fell more than 2%. 
• The general risk-aversion sentiment that has gripped markets comes amidst more hawkish comments from Fed policymakers. We covered yesterday that, over the past week, a slew of voting committee members have shown an apparent willingness to potentially skip a rate cut in December’s FOMC meeting. 
• Yesterday, Minneapolis Fed President Neel Kashkari (a non-voting member) said “The anecdotal evidence and the data we got just implied to me underlying resilience in economic activity, more than I had expected”. That suggested to Kaskhari that a pause in October would have been appropriate and not the delivered 25bps cut. 
• US Treasuries fell yesterday as markets continue to price out bets of further reductions before the year-end amidst the hawkish display from Fed policymakers. 
• Yields rose by 3-4 bps across the curve, while 30-day Fed funds futures now show that the market-implied probability of a 25bps cut and no rate cut is almost a coinflip. The probability of a cut is now at 49.6%, a huge drop from the 94.4% priced in exactly one month ago. 
• While President Trump signed legislation to end the federal government shutdown, there are still concerns over the flow of macroeconomic data releases — data the Fed needs to make a decision in December.
• Press Secretary Karoline Leavitt said earlier this week that the October jobs report may never be released, however National Economic Council Director Kevin Hassett told Fox News yesterday that “The household survey wasn’t conducted in October, so we’re going to get half the employment report … We’ll get the jobs part, but we won’t get the unemployment rate, and that’ll just be for one month.” That is, the report will be released, though will not include a reading of the unemployment rate.

• Bitfarms has announced that it will convert its Washington bitcoin-mining facility into a hub for artificial intelligence and high-performance computing, supported by a new $128M technology investment. The company plans to repurpose the 18-megawatt site by December 2026.
• This comes as Bitfarms reported a $46M quarterly loss, $0.08 per share which is around four times worse than market expectations. Its year-over-year revenue is up 156% to $69M but is also below expectations.

• Canary Capital’s spot XRP ETF (XRPC) recorded $58M in first-day trading volume, narrowly overtaking Bitwise’s Solana ETF launch at around $57M and securing the largest ETF debut of 2025 by volume. 
• R25 has launched its real-world asset (RWA) stablecoin protocol on Polygon, debuting rcUSD+, a yield-bearing stablecoin that targets a one-to-one US dollar peg while passing through yield from a portfolio of money market funds and structured notes.
• Unlike conventional stablecoins, rcUSD+ is designed to generate onchain income from traditional financial instruments, supported by multiple layers of credit enhancement to bolster its creditworthiness and peg stability.
• As rcUSD+ is issued and recorded directly on Polygon, rather than bridged from another chain, it is intended to be composable across lending, collateral and liquidity protocols, positioning rcUSD+ as institutional-style, asset-backed collateral that aims to narrow crypto’s yield gap with traditional finance as RWA adoption accelerates.

• The head of Taiwan’s cabinet, Cho Jung-tai, is preparing a report on the scale and outcome of Bitcoin seized by domestic authorities as the government considers whether to form a national Bitcoin reserve. Legislator Ge Rujun has suggested holding the confiscated Bitcoin rather than selling it, essentially creating a bitcoin reserve. The document will also assess the potential advantages and drawbacks of establishing a Bitcoin reserve, marking the first time the idea has been formally examined by Taiwanese officials.

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This Week’s Calendar:

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Charts of the Day:

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