London and New York Colour

• Last night’s CPI numbers ignited a breakout in risk assets. US equities hit new all-time highs, while BTC surged to 70k before settling back to 67.3k this morning.
• Market is pricing 2 rate cuts in 2024. Interest-rate futures now indicate a 56% chance of a rate cut in September, with the second cut to happen in December.

Our view:

• The Fed’s dot plot remains ambiguous, making it challenging to predict whether officials prefer one or two rate cuts this year. However, we anticipate a rate cut in September, with the Fed likely adopting a wait-and-see approach for subsequent meetings in November and December.
• We maintain a structurally bullish outlook for the remainder of the year, driven by the anticipated ETH ETF S-1 approval and potential rate cuts in September and at the year end.

Trade Ideas:

• Given the current steepness of the vol curve, we like building a coin position using a longer-tenor accumulator, capitalizing on the higher vols further out.

ETH Early Delivery Accumulator

Buy ETH at 3100 (11.4% discount to spot) IMMEDIATELY for 25% of the total deployment.
From the 9th week onwards, buy at 3100 every Friday as long as the spot price remains below 4750.

Expiry: 17JAN25
Strike: 3,100 (-11.4%)
Barrier: 4,750 (+35.7%)
Early Delivery: First 8 weeks are settled immediately
Observation Frequency: Weekly starting from 9-AUG
(ETH Spot Ref: 3,500)