Market Braces for Election Volatility With Hedging at Peak Levels

The Breakdown First Five - Monday, November 4, 2024

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. Hurricanes Ice Jobs

The October Jobs report showed just 12,000 new payrolls added, far short of the 100,000 consensus estimate. The BLS wasn’t able to tell how much hurricanes had impacted the soft number, but noted that a shorter than usual survey period depressed results. Generally the report was viewed as neutral, containing very little signal to suggest a trend change. Government jobs still dominate growth and slight weakening in the labor market is apparent. 

4. UBS Tokenized

Swiss banking giant UBS has launched a tokenized money market fund on Ethereum mainnet. Following in the footsteps of Blackrock and Franklin Templeton, the fund offers access to US treasury yield on the blockchain. It’s clear that tokenization is happening, now one of the largest questions will be interoperability and standardization. To that end, investment firms flocking to Ethereum is vastly better than choosing siloed private blockchains. 

3. Bitcoin Art Sells 

Around 70% of the 300 Bitcoin themed pieces were sold during Barcelo’s “Art of Revolution” exhibition. Held in the city’s Gothic Quarter, the artist, known as “Street” said the exhibit “demonstrates the growing global fascination with Bitcoin.” He noted that many visitors challenged their understanding of Bitcoin while visiting. The exhibit was so popular that it ran for an extra week and attracted the attention of other galleries to look into Bitcoin art. 

2. Chokepoint Confirmed

Coinbase has received FOIA materials from the FDIC and they appear pretty damning. They found over 20 examples of the banking regulator telling banks to “pause” or “refrain from providing” or “not proceed” with offering crypto-banking services. Anecdotally this advice caused a whole host of companies and individuals to be debanked, even where their crypto activities posed no stability risk. Examples include law firms and podcasts. 

1.  Election Volatility

This election is set to be extremely volatile, and not just for partisan supporters. The 10 year bond yield has been whipsawing around 4.3% for the past week, driving the MOVE index to a 1-year high. Bitcoin Volatility has also hit 3-month highs, while the VIX is at the highest level since the yen carry trade unwind. Hedgers are hedged and risk is being taken off. The only question is whether uncertainty will be cleared by a result or the contest will drag on for weeks.