It's Glass Half Full Despite Record Short ETF Volume

By Omkar Godbole (All times ET unless indicated otherwise)

You know how it feels when you’re watching a match, both teams score and you end up with a draw? So, that’s the bitcoin market right now.

The bulls pushed prices above $103,000 early Thursday, only for the bears to bite back, crashing prices to $91,000. As it stands, we’re trading steadily around $98,000. Talk about undecided …

The crash shook out leveraged crypto futures bets worth around $1 billion, bringing a degree of normality to what had become an overheated market. That’s possibly a blessing in disguise, because had BTC surged all the way up to $120,000, the eventual leverage shakeout would have been even more severe and could have potentially damaged investor confidence.

The glass-half-full perspective is supported by bitcoin spot ETFs, which managed to pull in a net $766 million despite the chaos.

But there’s a glass-half-empty side too. The ProShares Ultra Short Bitcoin ETF, which tracks twice the inverse of bitcoin’s daily performance, also saw a net inflow as well as record trading volume. While the $7 million added is small compared with the long spot ETFs, it shows the bears are ready to make their presence felt.

If it all feels a little shaky, there’s more to come, with the chance of downside volatility if U.S. nonfarm payrolls data points to a resilient labour market and sticky wage pressures. That would prompt a recalibration of Fed rate-cut expectations and possibly hurt crypto prices. Weak data, conversely, could yield a price bounce, although trading directionally might be tricky while prices are this indecisive.

In other news, President-elect Donald Trump’s appointment of David Sacks as Crypto and AI Czar (which might seem like the opposite of crypto’s decentralization ethos) is being viewed positively for Solana’s ETF prospects. Why? Because at one point, Sacks was associated with the crypto hedge fund Multicoin, one of Solana’s early investors. It seems farfetched, but hey it’s a typical bull-market narrative.

Looking at the broader market, Hyperliquid’s HYPE token is quickly approaching the $4.6 billion market value of Arbitrum’s ARB token in a move that indicates application-specific layer 2s like Hyperliquid are becoming the “real value capture mechanisms for DeFi applications,” according to Gautham Santosh, founder of Polynomial Protocol.

Gautham noted on X that building on general-purpose layer 2s could mean constructing someone else’s moat, essentially translating your success into their token value. He points out that while Arbitrum-based perpetual protocol GMX generates 54% more revenue than Hyperliquid, its market cap stands at just $376 million or just 8% of Hyperliquid’s.

That’s a lot to take in for today. So, as trader Alex Kruger said on X, “If you’re not a full-time trader, focus on portfolio construction.” Stay alert out there!

What to Watch

Crypto:
- Dec. 18: CleanSpark (CLSK) Q4 FY 2024 earnings. EPS Est. $-0.18 vs Prev. $-1.02.
Macro
- Dec. 6, 8:30 a.m.: The U.S. Bureau of Labor Statistics (BLS) releases November’s Employment Situation Report.
  - Nonfarm Payrolls (NFP) Est. 200K vs Prev. 12K.
  - Unemployment Rate Est. 4.2% vs Prev. 4.1%.
  - Average Hourly Earnings MoM Est. 0.3% vs Prev. 0.4%.
  - Average Hourly Earnings YoY Est. 3.9% vs Prev. 4.0%.
- Dec. 11, 8:30 a.m.: The U.S. Bureau of Labor Statistics (BLS) releases November’s Consumer Price Index (CPI) data.
  - Core Inflation Rate YoY Prev. 3.3%.
  - Inflation Rate YoY Prev. 2.6%
- Dec. 11, 9:45 a.m.: The Bank of Canada announces its policy interest rate (also known as overnight target rate and overnight lending rate). Prev. 3.75%.
- Dec. 12, 8:15 a.m.: The European Central Bank (ECB) announces its latest monetary policy decision (three key interest rates).
  - Deposit facility interest rate Prev. 3.25%.
  - Main refinancing operations interest rate Prev. 3.4%.
  - Marginal lending facility interest rate Prev. 3.65%.

Token Events

Governance votes & calls
Unlocks
- Solana’s Jito to release 105% of JTO circulating supply on Dec. 7 at 10 a.m., worth nearly $500 million at current prices.
- Neon to release 50% of NEON circulating supply on Dec. 7 at 10 a.m., worth $35 million at current prices.
Token Launches
- Binance lists Across Protocol’s ACX and Orca’s ORCA, trading to begin at 8 a.m.
- Futures of PolyhedraZK’s ZKJ went live on OKX.

Conferences:

Token Talk

By Shaurya Malwa
Ethereum and Base memecoin mog (MOG) surged 40% to set fresh highs Friday on the back of a Coinbase spot market listing. It becomes the second-largest cat-themed token behind Solana-based popcat (POPCAT)

The memecoin is known for its distinctive branding around the meme of a cat laughing with tears (often represented by the “joycat” emoji 😹) and sporting Pit Viper sunglasses. This token doesn’t boast any intrinsic utility, thriving instead on its community-driven ethos and the virality of meme culture within the cryptocurrency space.

Meme coins often rely on community hype, and MOG has successfully captured a zeitgeist with its humorous and culturally resonant branding driving demand.

Its cult community often appears to ‘mog’ other token communities (a slang term for outperforming) on social posts or in replies on X — and that has become a meme itself, further fueling the token’s popularity.

Derivatives Positioning

BTC and ETH perpetual funding rates have normalized from previously overheated levels, with the ETH rate remaining elevated compared with BTC, suggesting a bullish bias for the ETH/BTC ratio. The positioning in SOL perpetuals is even more bullish.
The open interest-normalized cumulative volume delta has declined for most major tokens in the past 24 hours, indicating that the sell-off primarily resulted from the unwinding of long positions rather than fresh shorts.
Despite BTC’s quick retrace to sub-$100K levels, calls continue to trade at a premium to puts, although the spread is narrower than it was early Thursday. A similar dynamic is observed in ETH options.
A large bull call spread crossed the tape on Deribit, involving a long position in the $106,000 strike call and shorting the $110,000 strike call, both expiring on Dec. 27, according to data source Amberdata.