🌳 Biden To Quadruple Tariffs On China EVs; Ark Invest And 21 Shares Removes Staking From ETH ETF Application

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• Biden to quadruple Tariffs on China EVs; Putin names economist as defense minister (More in Macro & TradFi)
• Ark Invest and 21 Shares drop staking from ETH ETF proposal; EIGEN token claim starts today with EigenDA ready for staking and delegation (More in DeFi & CeFi)
• ENA whale incurs a huge loss on their holdings; 2 wallets holding 1,000 BTC became active after being dormant for more than 10 years (More in On-Chain)
• Bitcoin's IVs stabilize amid subdued Runes activity; call-put skews reflect slight bullish sentiment (More in Crypto Derivatives)
• BTC and ETH oscillate slightly above the previously identified support zones with neutral market sentiments (More in Crypto Technical Analysis)

Macro & TradFi

President Joe Biden has finalized his decision to quadruple tariffs on Chinese EVs and increase levies by double or triple for other key strategic industries. Although sectors like Solar manufacturing equipment are poised for exclusion to align with Biden’s goal of contending for clean-energy supply chains from China, the imposition of tariffs on steel and aluminum will be increased to 25% for certain products currently subjected to a 7.5% rate or no tariff at all.  The proposed EV tariff is intended to safeguard the United States from a potential influx of Chinese automobiles, which could disrupt the politically significant automotive industry. This final decision seeks to differentiate Biden from Trump and maintain the US’ competitive edge against China while fueling the growth of America and maintaining the relationship with China.

In other news, more than two years after the invasion of Ukraine, Vladimir Putin made an unexpected shift in leadership by appointing an economist to replace his long-serving defense minister for the first time in Russia’s history, signaling the focus on expanding the Russian war economy. As the Ukraine war drags on, a politician consultant close to Putin mentioned that this change in appointment allows Putin to exert more control over military matters and offers a fresh face for their armed forces given the recent corruption scandal involving their former deputy defense minister.

On Friday, the S&P 500 and the Dow Jones ended the week positively, increasing by 0.16% and 0.32% respectively. Conversely, the Nasdaq 100 decreased by a mere 0.03%.  Medical equipment maker Mettler-Toledo International Inc (MTD) rallied by 17.04% as the company raised its annual profit forecast for 2024. Cybersecurity company Gen Digital Inc (GEN) surged by 15.34% as they received a buy rating from Bank of America Securities, as well as a change of leadership on their board which the market reacted positively towards. Akamai Technologies Inc (AKAM) plunged by 11% after missing out on earnings expectations and analysts lowering their price target for Akamai. Investors will be looking out for the US CPI data due next Wednesday, 15 May, at 20:30 SGT.

CeFi & DeFi

• Ark Invest and 21 Shares amends the ETH ETF application to remove the staking component
• EIGEN token claim opens today and EigenDA begins staking and delegating to operators
• Franklin Templeton CEO says all ETFs and mutual funds will be on the blockchain
• Runes protocol sees significant declines in activities
• Kraken makes another push to dismiss SEC lawsuit

ARK Invest and 21Shares have revised their spot ETH ETF proposal, removing plans for staking a portion of the fund's assets through third-party providers. The updated filing, submitted on May 10, omits clauses related to staking and receiving ETH rewards while retaining broader comments on potential risks and impacts on the price of Ether. Analysts speculate that this revision may be a response to potential SEC feedback or a strategic move to limit the information available for possible rejection. The fund aims to provide direct exposure to ETH and will trade on the Cboe BZX Exchange if approved, utilizing the CME CF Ether-Dollar Reference Rate. However, SEC delays in decisions on spot Ethereum ETF proposals have led to dwindling optimism for approval, with analysts lowering estimates of approval chances.

Meanwhile, EigenLayer's native token claims are set to open today following the project's announcement of its distribution and "stakedrop" plan last month. However, the tokens claimed will remain non-transferable until the end of the third quarter, with token transfer functionality expected by Sept. 30, 2024. Despite this limitation, users can immediately begin staking and delegating to operators of Eigen's native data availability solution, EigenDA, which is the first actively validated service (AVS) on the network to accept Eigen staking delegation.

On-Chain

An analysis by Lookonchain showed that a whale incurred a huge loss of $2.71M on their $ENA holdings. Notably, he purchased a total of 9.33M $ENA worth $10.47M and withdrew them from Binance for staking purchases when the price of $ENA was reaching its peak. On April 25 when $ENA's price started depreciating, the whale then chose to unstake his $ENA and transferred a total of 8.33M $ENA with a value of $6.94M into Binance, leaving himself with $823K worth of ENA and a total loss of $2.71M. This shows that traders should adopt a more cautious investing approach when dealing with volatile assets.

In another analysis, Lookonchain identified 2 wallets that have performed new transactions after being dormant for 10.7 years. Specifically, they transferred out 1,000 Bitcoin worth $60.9M after not touching their assets since the time of purchase in 2013. Traders should take a more circumspect stance when dealing with Bitcoin in the near future as these recently active wallets could potentially take profits on their assets.

Crypto Derivatives

• Funding rates remained positive for BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH increased marginally to 54.49% and 62.19%, respectively.
• The 30-day 25-delta skew (C-P) for BTC recovered to 0.36% while ETH rose to -2.00%.
• The futures market witnessed $104.64M in liquidations, with shorts representing 50.84%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Bitcoin ATM implied volatilities (IVs) showed a brief recovery today, with the 7-day IV at 51.20% and the 30-day IV at 52%, remaining relatively stable compared to last week. This subdued IV likely reflects a significant decline in activity on the Runes protocol. The consistent IV suggests limited market reaction or anticipation of major volatility triggers in the near term.

The persistent contango in Bitcoin's term structure indicates that market participants expect future volatility to exceed current levels. Concurrently, the overall decrease in IVs across the curve suggests expectations of BTC price stabilization.

Bitcoin's 7-day and 30-day call-put skews have hovered near 0%, with 7-day skews at -0.96% and 30-day skews at 0.36%. This indicates a balanced sentiment among option investors, leaning slightly bullish. This optimism may stem from Wells Fargo's recent disclosure of its exposure to Bitcoin ETFs in a filing with the Securities and Exchange Commission last Friday, suggesting institutional interest and confidence in Bitcoin.

Lastly, @Paradigm highlighted option flows this week, emphasizing upside coverage with strategic call purchases. Key BTC trades encompassed the procurement of 788x 28-Jun-24 80000/90000 Call Spreads and 400x +1.00-Call-27 Sep 24 65000 / -1.50-Call-27 Sep 24 110000 Custom strategies. For ETH, notable transactions included 3500x -1.00-Put-28 Jun 24, 2700, / +1.00-Put-28 Jun 24 2900 / -1.00-Call-28 Jun 24 3400 Custom strategies and 2875x (Inverse) 28-Jun-24 4000 / 26-Jul-24 5500 Call Calendars.

Crypto Technical Analysis

In Technical Analysis, BTC's price hovers around $61.3K. The key support level at $60K has functioned as both a strong psychological and technical barrier. The Relative Strength Index (RSI) sits near 48.36, indicating a neutral market without overbought or oversold conditions. If the bullish momentum continues, BTC’s immediate resistance is around $64K, representing approximately a 4% gain from current prices. Conversely, a break below $60K could trigger a decline toward the recent $58K support level or even the long-term $52K support.

Now, looking at ETH’s 4H chart, ETH is currently trading at approximately $2.9K, hovering near a critical support level at $2.8K, which has proven robust over recent months. The chart indicates that resistance lies at $3.2K and $3.3K, levels where previous rallies have stalled, suggesting it is a major barrier for bullish momentum. The Relative Strength Index (RSI) stands at 38.88, indicating a neutral to slightly bearish sentiment, as it nears the lower boundary of the neutral range but is not in oversold territory. Looking forward, if ETH sustains above the $2.8K support, there could be a potential test of the $3.2K resistance, with a break above this level possibly leading to further gains towards $3.4K. Conversely, a drop below $2.8K might drive prices down toward the next significant support at $2.6K.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Biden to Quadruple Tariffs on China EVs, Offer Solar Exclusions

• In the EV future, Thailand, the 'Detroit of Asia,' could be a key China hedge for automakers.

• Australia's budget is expected to target housing crisis as prices keep climbing

• Donald Trump shuts down rumors about considering Nikki Haley for vice president

• Putin Names Economist as Defense Minister in Surprise Reshuffle

• China fires starting gun on Rmb1tn debt sale to boost economy

• Israel defies international censure and orders more Palestinians to evacuate Rafah

• Putin Renews Nuclear Threats Against West at Military Parade

• A Doomsday Recession Mentality Is Keeping the S&P 500 Strong

• China to Nurture Stock Rally by Masking Live Foreign Flows Data

• Stubborn Inflation Poses Risk to Recently Upgraded US Forecasts for Economic Growth

• Bank of England Heads for Historically Slow Rate Cutting Cycle

Crypto

• ARK and 21Shares drop staking plans from Ethereum ETF proposal

• Coinbase-initiated Stand With Crypto advocacy group launches PAC targeting US elections

• IBIT and FBTC ETFs hit $10 billion AUM in weeks, smashing previous record of three years: analyst

• Runes protocol sees significant decline in activity

• Franklin Templeton CEO says all ETFs and mutual funds will be on blockchain

• JPMorgan’s Onyx to industrialize blockchain PoCs from Project Guardian

• Binance to be under FRA surveillance for next 3 years: Report

• Kraken makes another push to dismiss SEC lawsuit ahead of June hearing

• Mark Cuban advocates for CFTC to regulate ‘all crypto’ ahead of US election day

• House expected to vote on crypto bill offering SEC, CFTC clarity in May

• Eigenlayer launches EIGEN token — but it’s nontransferable till September

• EigenDA to accept staking delegations after Eigen token claims open today

• Franklin Templeton claims Coinbase-incubated Ethereum Layer 2 Base has 'hit a homerun' in SocialFi

• Hong Kong’s spot bitcoin ETFs saw second daily net outflows since debut

• Coinbase can't force the SEC to write new rules, SEC argues in new brief

• Binance, KuCoin Win Registration From India Anti-Money Laundering Regulator as Crypto Credibility Improves

Deal Flow

• OKX Ventures invests in Web3 ‘play ARPG to train AI’ game Blade of God X

• The Leading Bridge with 1.6M Users in 206 Countries & Regions, Owlto Finance Raises $8M Ahead of Token Launch & Airdrop

Yours sincerely,
Treehouse Research 🌳