While President-Elect Trump is still not slated to take office for another 2 months, his impact has been felt far and wide both in geopolitics and capital markets. Crypto made headlines as BTC charged above 80k before some US counties managed to finalize counting their ballots, with Blackrock’s BTC ETF (IBIT) seeing a record $1.1bln on Thursday, and even Ethereum recording the 3rd single highest single-day inflow in its short-history.
IBIT is now on track for the 3rd highest inflows across all US listed ETFs YTD, and its AUM has now surpassed iShare’s own gold offering at just over $33BLN. Over this recent run-up, CEX liquidated over $800M in short futures over the past week for one of the largest short-liquidations all year, while annualized perp funding rates spiked to around 30% as margin leverage is returning en-masse.
In addition, stablecoin marketcap has been recovering steadily all year despite lagging on-chain activity, recovering to the highs seen in 2022 as TradFi inflows have been a positive mainstay. Further stablecoin inflow should provide for more margin capital and we should expect to see leverage hold up as price continues to rally.
Finally, on the political side, it is easy to understand why the industry is getting increasingly positive on a friendlier crypto framework, given the more positive legislative makeup in the upcoming administration.
Back on macro, US equities have brushed off the disappointment in Chinese stimulus, and continue to make new highs while fixed income has settled down thanks to a dovish FOMC last Thursday. Furthermore, macro cross asset volatility has collapsed as markets have been given the risk-on greenlight into year-end. On the other hand, BTC and ETH vols have rebounded slightly given high realized vols on the upside break of 80k, with 100k calls starting to come into play once again.
Looking ahead, we’ll have CPI this week but not a lot of other macro excitment for the rest of the month. Interestingly enough, Nvidia earnings is priced as a more important risk event than CPI or NFP over the next month, indicative of the market’s comfort with the Fed’s stance and a lack of negative catalysts.
So, enjoy the party while it lasts, but keep your risk management tight as leverage is making a comeback. Good luck and happy trading!
