Bitcoin's BTC$87,387.74 underperformance relative to gold, to which it is often compared, continues as its price in dollars lacks clear directional bias, trading back and forth between $86,000 and $90,000. It's currently up 1.2% since midnight UTC against the greenback.

The ratio between the price of bitcoin and gold, however, has dropped to 20.18, the lowest since Jan. 1, 2024, according to data source TradingView. The sustained decline shows investors still favor the precious metal as the preferred safe-haven asset amid what some see as fiscal imprudence across the advanced world and talk about Federal Reserve interest-rate cuts.

The ratio may improve later Thursday should U.S. inflation data come in lower than expected. That may increase rate-cut expectations and spur risk taking in financial markets.

Derivatives Positioning

• The downtrend in BTC's 30-day implied volatility, represented by Volmex's BVIV index, has stalled at around 50%. However, there are no signs of a renewed upswing, meaning traders aren't expecting a pick up in volatility as of now.
• The MOVE index, the equivalent for U.S. Treasury notes, has dropped to 62.73, the lowest since October. A decline in Treasury market volatility typically bodes well for risk assets.
• Among major tokens, SOL TRX and DOGE have seen an increase in open interest (OI) in futures market.
• Funding rates for BNB, XRP, SOL, TRX and DOGE have flipped negative. The combination of an increase in OI and negative rates in DOGE and TRX indicate a build up of short positions.
• On Deribit, risk reversals continue to show bias for BTC and ETH puts, indicating persistent downside fears.
• Block flows featured call calendar spreads and strangle in BTC and put spreads and strangles in ETH.

Token Talk

• Yearn Finance, one of DeFi’s earliest and most recognizable yield aggregators, suffered another exploit this week, with attackers draining about $300,000 from a legacy smart contract.
• The vulnerability was in a contract tied to iEarn, an early version of the protocol dating back nearly six years. Security firm PeckShield flagged the exploit, noting that the attacker swapped the stolen funds for 103 ETH, worth around $290,000.
• Yearn responded shortly after, clarifying that the attack did not impact current vaults or contracts. “The problem is exclusive to iEarn and does not impact current Yearn contracts or vaults” the team posted on X.
• This is the second exploit Yearn has suffered in the past month. Earlier in December, attackers made off with $9 million from a separate vulnerability.
• Yearn’s YFI token dropped nearly 6% after the exploit and is underperforming the wider market. Total value locked on the yield aggregator plunged more than $50 million to $560 million since the first exploit, data shows.