Crypto Markets Daily Feb 27 2025

Daily Updates:

• The crypto selloff deepened on Wednesday, before limply rebounding overnight during Asian hours. BTC now trades at $86.5K, ETH at $2.4K, and SOL at $141.

• The term structures of both BTC’s and ETH’s implied volatility have once again inverted, as front-end vol has ticked up quickly overnight at a lag to the move in spot.
• Skew levels at short-tenors for both majors remain strongly positioned towards puts.

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• However, the positioning at longer tenors is at odds with short tenors.
• Whereas similar spot sell-offs in the past have triggered significant spikes in BTC’s 1-month implied volatility, this time implied volatility has not just barely reacted, but it continues to hover near historical lows.
• The anomaly extends beyond ATM implied vol. Typically, sell-offs of this magnitude lead to a shift towards puts, resulting in a sharp drop in skew. Yet the market is still pricing the smile as being skewed towards calls at tenors of 1 month or longer.

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• Spot Bitcoin ETFs continue their onslaught of selling, with yesterday’s $754.6M in outflows, marking the 7th consecutive trading day of outflows. Earlier in the week, Tuesday 25th, saw the largest single day net outflows since the launch of the spot products in January 2024 (outflows of $1.1B). 

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• President Trump further added to the current market uncertainty yesterday with a series of seemingly contradictory plans on his tariff implementations. 
• During a Cabinet meeting yesterday, he was asked if he plans to move forward with 25% tariffs on Canada and Mexico which are due to begin from March 4th. Trump responded “I’m not stopping the tariffs”. 
• However, he then later said the tariffs would be implemented from April – making it unclear if the two trade partners will have an extended pause period, or if he was actually referring to the program of reciprocal trade tariffs being enacted from April. 
• Trump additionally stated that he had decided on a 25% tariff on the EU, however fell short of explaining if it would be a flat tariff on all EU exports into the US or on certain products only. 

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• In Defi, Mastercard has entered a new partnership with Ondo Finance which will see it bring Ondo’s Short-Term US Government Treasuries Fund (OUSG) to its Multi-token Network, in turn allowing businesses to earn a daily yield through the tokenized assets. 
• Additionally, in a blog post on Tuesday, Ripple Labs unveiled a roadmap for an institutional DeFi ecosystem on the XRP Ledger – the native blockchain network. 
• The roadmap includes a DEX, a credit-based DeFi lending protocol and a multi-purpose token, amongst other plans. 

This Week’s Calendar:

Charts of the Day: