Today’s Narrative - 📉Bearish📉

Macros

• The Fed’s rate cut of 25bps came as expected, but the reduced projection of two cuts from four in 2025 caused market discomfort.

• Inflation expectations were revised higher, contradicting earlier optimism about inflation nearing the 2-3% target, making the market more cautious.

• The dollar index (DXY) surged past 108, signaling risk aversion as investors moved toward safer assets.

• Volatility spiked, with the VIX showing its highest single-session percentage gain since February 2018, hinting at turbulence ahead.

• Market overreaction is likely temporary, as corrections often signal healthy resets rather than long-term downturns.

Crpytos

• Bitcoin fell below $100K, its steepest drop since September, driven by macro factors and Powell reiterating that the Fed cannot hold Bitcoin.

• $ENA continues to display strength, buoyed by partnerships like World Liberty Financial and Ethena Labs, alongside expectations of a major upcoming announcement. (Scroll down for more)

• $USUAL shows momentum, leveraging Binance’s support and innovative use of BlackRock-linked stablecoins to surpass Ondo in TVL.

• $MORPHO builds traction, possibly linked to Ethena’s second airdrop and ongoing DeFi adoption.

• $PENDLE’s steady growth stems from its expansion into the Bitcoin ecosystem and continued DeFi activity, pointing to long-term potential.

• $FUEL launched its TGE, transitioning from building on Celestia to Ethereum, reflecting strategic adaptability. (Scroll down for more)

• Altcoins exhibit lower correlation to Bitcoin, signaling a possible reset ahead of a strong altcoin rally early next year.

• FTM’s Sonic Mainnet debut introduces a high-throughput, EVM-compatible blockchain, allowing $FTM holders to convert to $S at a 1:1 ratio.

• ARKM partners with Sui Network, enhancing data services for Sui users and solidifying its utility.

• Lens raises $31M, with Avara, the $AAVE team, planning to launch its mainnet and token generation event in Q1 2025.

Our Stance

Ethereum-related altcoins like $MORPHO, $ENA, and $AAVE are showing resilience, highlighting strength in the DeFi ecosystem. While the market digests the hawkish dot plot and revised inflation expectations, the short-term noise is temporary. Starting from such a cautious base, future news is likely to turn more bullish, supporting a long-term constructive outlook.

The shift from expectations of four rate cuts in 2025 to just two is significant, requiring time for markets to adjust. Crypto, closely tied to equities, reflects macro trends, and as tighter monetary conditions push investors out of safe bonds, capital is likely to flow back into risk assets.

Patience and focus on quality remain crucial. As the market stabilizes, strategic opportunities will emerge in strong projects. We will continue to monitor developments closely.

Subscribe to Don’t FRET
Get content like this straight into your inbox

Free Daily Trade Alerts: Expert Insights at Your Fingertips

• Master the market in 5 minutes per day

• Hot stock alerts sent directly to your phone

• 150,000+ active subscribers and growing fast!

Free Access Here

📈Bullish📈

Why $ENA Could Be the DeFi Giant Everyone’s Missing

$ENA, the governance token for Ethena Labs, has been making waves in the DeFi world with a string of recent developments. While some of the news might feel like incremental updates, the growing strength of Ethena’s ecosystem is undeniable. For those unfamiliar, Ethena Labs focuses on synthetic dollar solutions and DeFi integration, aiming to reshape how decentralized finance operates.

Breaking Down the Updates

• The sUSDe Proposal and World Liberty Financial: Ethena has proposed integrating sUSDe as a core collateral asset in World Liberty Financial’s Aave instance. This move would allow WLFI users to earn both sUSDe rewards and WLF token incentives, strengthening Ethena’s ties with the Trump-affiliated project.

• USDe’s Growing Influence: Ethena’s synthetic dollar, USDe, is now the third-largest stablecoin, thanks to its innovative delta-neutral strategy that maintains value against market volatility.

• Collaborations That Matter: Recent collaborations with $USUAL and BlackRock are key. The BlackRock-backed USDtb stablecoin ties Ethena to a tokenized fund investing in U.S. government debt, boosting its credibility.

• DeFi Power Moves: Ethena is making waves in $PENDLE’s ecosystem, where 50% of the Total Value Locked consists of Ethena assets like USDe and sUSDe, showcasing its growing influence.

• AAVE Connection: Ethena’s relationship with AAVE, a dominant DeFi player, positions it for further growth as the platform strengthens its presence in the space.

Why $ENA Stands Out

$ENA distinguishes itself with its innovative synthetic stablecoin, USDe, which uses a delta-hedging strategy to maintain stability, scalability, and censorship resistance. Unlike traditional stablecoins backed by fiat reserves, USDe is collateralized with Ethereum (ETH) and liquid staking derivatives like stETH. Using a delta-neutral strategy, Ethena hedges price volatility by shorting ETH derivatives, ensuring USDe's stability.

Users can mint USDe by depositing ETH or stETH as collateral and earn yields from Ethereum staking rewards and funding rates.

📈Bullish📈

$FUEL’s Pivot to Ethereum Could Redefine Scalability

$FUEL, originally aligned with Celestia, has pivoted to Ethereum, launching its Token Generation Event (TGE) and embracing the role of a high-performance Layer-2 solution. The shift is a strategic move to address Ethereum’s scalability challenges while leveraging its vast ecosystem and developer community.

What Is $FUEL?

$FUEL is a Layer-2 blockchain designed to make Ethereum faster and cheaper. It uses rollup technology to process transactions off-chain, significantly reducing congestion and gas fees while maintaining compatibility with Ethereum’s ecosystem. By inheriting Ethereum’s security, $FUEL ensures trust and decentralization.

Why the Pivot?

The move to Ethereum prioritizes adoption by tapping into the blockchain’s established user base and thriving DeFi and NFT markets. It gives $FUEL access to millions of users and thousands of developers, accelerating its utility and growth.

What Makes It Unique?

$FUEL combines scalability with a seamless user experience, allowing dApps to migrate easily and operate at lower costs. Its focus on speed, efficiency, and security positions it as a key player in Ethereum’s expansion.

Takeaway

$FUEL’s pivot is a bold step that aligns it with the biggest blockchain ecosystem. As Ethereum adoption grows, $FUEL could play a pivotal role in making blockchain technology more scalable and accessible. Keep an eye on this one.

📉Bearish📉

Volatility Is Back—What It Means for Stocks and Crypto

The markets are reeling after Federal Reserve Chair Jerome Powell’s hawkish tone triggered a surge in volatility. With the VIX spiking, the dollar index (DXY) hitting new highs, and rate adjustments reshaping expectations, both equities and crypto are feeling the pressure. Let’s break it down.

What’s Driving the Chaos?

• VIX Surge: The volatility index (VIX) soared by over 70%, its biggest single-day percentage jump since 2018. This reflects growing investor fear and expectations of sharper price swings.

• DXY at New Highs: The dollar index climbed past 108, driven by the Fed’s stance on fewer rate cuts in 2025. A strong dollar tightens financial conditions globally, impacting risk assets.

• Powell’s Hawkish Comments: Powell signaled that the Fed is prepared to keep rates higher for longer, citing sticky inflation. The reduced expectations for rate cuts in 2025 amplified market jitters.

What It Means for Equities

A rising DXY hurts multinational companies by making U.S. exports more expensive, while higher borrowing costs weigh on corporate profits. The sharp VIX jump indicates investors are bracing for a rocky road ahead. However, such corrections often serve as resets, offering opportunities to pick up quality stocks at discounted prices.

What It Means for Crypto

Crypto markets, closely tied to broader risk sentiment, have also felt the impact. Bitcoin and altcoins dipped as tighter financial conditions drained liquidity. Historically, such periods of volatility are followed by a reallocation into crypto once the dust settles, especially into projects with strong fundamentals.

Subscribe to Don’t FRET
Get content like this straight into your inbox