Faulty Basel
Dick Lo3 min read·Just now--
05-June-2026
- Regional stability hung in the balance after Hezbollah rejected the brokered Israel-Lebanon ceasefire, dealing a severe blow to broader U.S.-Iran peace initiatives. The rejection follows an earlier warning from Iranian Foreign Minister Araghchi that subsequent strikes on Beirut would prompt a “full-scale resumption” of the war. Compounding the risks of a weekend flare-up, the U.S. State Department has issued fresh security alerts to citizens across 14 Middle Eastern nations amid intensifying geopolitical friction.
- On the macro front, market focus centres on the release of May’s non-farm payrolls, where the consensus sits at +85k. With ADP payrolls coming in hot ahead of expectations while the ISM Services PMI Employment sub-index showing a third consecutive month of contraction, markets are bracing for a messy print. While a below-consensus print would keep the soft landing thesis intact, a print north of 120k would trigger renewed hawkish Fed anxieties, particularly against a backdrop of structurally elevated inflation driven by the protracted Middle East conflict.
- Coinbase and Better have executed their inaugural Fannie Mae-backed mortgage utilising Bitcoin as collateral. Under this pioneering structure, a homebuyer secures a conventional Fannie Mae mortgage while concurrently taking down a separate crypto-backed loan for the down payment using their Bitcoin holdings as collateral. Coinbase plans to roll out this product nationwide, reportedly boasting an existing waitlist representing approximately $250 million in loans.
- A group of U.S. Senators, led by Senators Dan Sullivan and Cynthia Lummis, has submitted a formal letter to the Federal Reserve, the FDIC, and the OCC calling for a comprehensive revaluation of Basel’s risk weighting for Bitcoin and digital assets. The lawmakers argue that the current 1,250% risk weighting is excessively punitive and entirely non-commensurate with the underlying risks, rendering it prohibitively capital-inefficient for banks to hold digital assets. A rollback or modification of this restriction would remove a massive structural barrier, likely catalysing a broader expansion of institutional entry into native physical crypto trading.
Trading Roadmap
Bitcoin continues to languish near weekly lows, with sentiment weighed down by gridlocked Middle East diplomatic negotiations, an apparent stall on the Clarity Act, and an ongoing liquidity drain driven by the SpaceX IPO and massive funding rounds for major AI plays. Adding to the friction are concerns over a potential Strategy overhang, given Michael Saylor’s radio silence post the firm’s disposal of 32 BTC from its treasury. On the plus side, persistent negative funding on BTC perpetuals suggests that long leverage has already been thoroughly flushed out, leaving the market net-short via speculative positions and hedges.
Tonight’s employment data release as well as heightened threat of weekend escalation in the Middle East both serve as potential triggers for a breach of the February $60k lows, which could spark an accelerated downside cascade. Having incrementally built July and August positions, we would wait and see if more favourable levels eventuate before committing to further tactical accumulation.
Clients continue to favour premium harvesting opportunities, capitalising on elevated implied volatilities and steep put skews to capture yield with a significant downside buffer.
Crucially, the market will look forward to any announcement from Strategy next Monday (or a Sunday evening hint from Michael Saylor on social media) regarding potential capital raising via common stock issuance to bolster dollar reserves and alleviate concerns surrounding the firm’s dividend coverage.
Disclaimer
All information, levels, prices and documents provided herein are being provided for general informational purposes only and should not be considered as a solicitation, offer or recommendation by TDX Strategies Ltd or any of its affiliates. Please read and fully understand our “Electronic Communication Disclaimer” which can be found at https://www.tdx-strategies.com/electronic-communication.
