🌳 China Boosts Fiscal Spending; Treehouse Raises tETH Vault Cap

GM 🌳

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Our Daily View

What We Are Covering Today

• China intensifies economic stimulus; U.S. jobless claims hit four-month low (More in Macro & TradFi)
• Treehouse Protocol raises tETH vault cap; Ethena to debut new UStb stablecoin backed by BlackRock (More in DeFi & CeFi)
• The maturation of Bitcoin is driven by Spot ETFs reducing volatility; large holders continue accumulating (More in On-Chain)
• IV spikes higher across tenors; BTC 30-day C-P skew nears monthly high  (More in Crypto Derivatives)
• BTC approaches key resistance at $69.7K; ETH consolidates near $2.7K with potential breakout ahead (More in Crypto Technical Analysis)

Macro & TradFi

China's Politburo has intensified efforts to revive its slowing economy, with a strong commitment to fiscal spending and stabilizing the property market, signaling urgency in addressing economic challenges. Measures include halting the property sector's decline and potentially issuing 2 trillion yuan in special sovereign bonds to stimulate consumption and ease local government debt. The Politburo's decisive tone contrasts with prior vague statements, underscoring the gravity of the situation. This pivot marks a departure from earlier piecemeal approaches, aiming to achieve the nation's annual growth target of around 5%, despite recent economic setbacks. 

Meanwhile, U.S. weekly jobless claims dropped to a four-month low, indicating a strong labor market, while corporate profits were revised higher for the second quarter, further bolstering economic resilience. Initial unemployment claims fell to 218,000, and continuing claims increased slightly, signaling stable employment conditions despite a broader slowdown in job openings. Corporate profits saw significant upward revisions, reflecting stronger-than-expected domestic earnings, which could support continued business investment. The improved economic outlook complicates the Federal Reserve's path for future rate cuts, as solid growth and healthy labor conditions reduce the urgency for aggressive monetary easing. 

Lastly, U.S. markets closed higher on Thursday, driven by strong economic data and corporate earnings, particularly in the technology and mining sectors. Weekly jobless claims fell more than expected, reinforcing confidence in the labor market, while second-quarter GDP remained steady at 3%, highlighting robust economic growth. Micron Technology's shares surged nearly 16% after exceeding revenue expectations, boosting the broader semiconductor index. Additionally, Chinese stimulus news lifted materials stocks, with miners like Freeport-McMoRan and lithium producers gaining significantly. The market rally, led by the S&P 500's record high, reflects optimism around artificial intelligence demand and expectations of further Federal Reserve rate cuts. Investors will be looking out for the US Core PCE Price Index data due today at 20:30 SGT.

DeFi & CeFi

• Treehouse’s tETH vault cap raised
• Ethena plans to launch new stablecoin backed by BlackRock
• Gensler warns crypto industry 'will not long persist' without investor protection
• Robinhood is mulling a potential stablecoin launch: Bloomberg
• Singapore Court grants WazirX four-month conditional moratorium

Treehouse Protocol has raised its tETH vault cap, enabling broader participation while launching the Market Efficiency Yield (MEY) strategy to optimize on-chain interest rates for better user yields. Alongside this, the GoNuts Campaign has been introduced, offering rewards to tETH holders, Treehouse Squirrel Council members, and prominent NFT holders like BAYC, Pudgy Penguins, and Cryptopunks. Additionally, Treehouse Squirrel Council holders can look forward to the upcoming artwork reveal. With over $80M in Total Value Locked, the protocol ranks among the top 70 on Ethereum.

In other news, Ethena plans to launch a new stablecoin, UStb, backed by BlackRock’s tokenized U.S. Treasuries fund (BUIDL) through a collaboration with Securitize. UStb will operate independently from Ethena’s existing synthetic stablecoin, USDe, offering a different risk profile. While USDe uses a derivative-based strategy with crypto collateral, UStb will invest in BlackRock's BUIDL fund, which focuses on U.S. dollars and Treasury bills.

On-Chain

According to Kripto Mevsimi from CryptoQuant, the introduction of Bitcoin Spot ETFs is playing a role in the asset’s maturation process as long-term holders gradually shift their positions to new owners through profit-taking. Many of these new investors are likely former Grayscale holders transitioning to Spot ETFs due to lower fees rather than entirely new participants. These holders have surpassed the 155-day on-chain threshold and are now categorized as long-term investors. This shift is significant, with short-term supply declining and long-term supply rising, signaling a transition toward stability. Unlike in previous years, where sharp price movements were common, the influence of Spot ETFs and traditional financial instruments is dampening Bitcoin's volatility. 

In an analysis by Santiment, Bitcoin reaching a $65K market value for the first time since August 1st is driven in part by sustained accumulation from large holders (whales and sharks). Over the past six months, wallets holding 10 or more BTC have collectively accumulated $4.08 billion in Bitcoin. This concentrated buying activity has likely helped stabilize the market, preventing significant price declines despite broader market volatility. The ongoing accumulation signals strong confidence from large investors, which could provide continued upward pressure on Bitcoin’s price.

Derivatives

• Funding rates for both BTC and ETH remained positive. 
• Deribit Implied Volatility Index (DVOL) for BTC and ETH increased to 52.76% and 59.38% respectively.
• The 30-day 25-delta skew (C-P) for BTC and ETH rose to 1.14 and -0.32, respectively.
• The futures market witnessed $142.91M in liquidations in the last 24 hours, with shorts representing 62.72%.

BTC ATM IVs have experienced a notable increase following the surge in the value of the underlying spot. The 30-day IV has risen more significantly than the 7-day IV, suggesting that traders may anticipate increased price movements in the month ahead, likely after the current week.

The BTC term structure remains in a contango shape, with noticeable increases in IVs across the curve over the last 24 hours. However, the increases are more pronounced at the front end of the curve, suggesting that traders may anticipate stability in BTC's price in the long term.

The call-put skew, on the other hand, has also seen a notable rise, with the 30-day skew at 1.14 and the 7-day skew at 0.07. Specifically, the 30-day IV is nearing its monthly high, indicating the market’s optimism regarding BTC’s future direction.

Lastly, @Paradigm highlighted a trading session with mixed flows. Notable BTC trades included the purchase of 460x 25-Oct-24 $58K/$60K/$70K/$72K Iron Condor (a put spread and a call spread with the same expiration and four different strikes) and 391x 25-Oct-24 $77K/$84K Call Spread. On the ETH front, we noticed the sale of 1,500x 27-Sep-24 $2.8K / 4-Oct-24 $2.9K Call Calendar and the purchase of 1,250x 25-Oct-24 $2.4K/$2.6/$2.9K/$3.1K ICondor.

Crypto Technical Analysis

Moving on to technical analysis, Bitcoin is currently trading at $65.1K, having successfully broken through the resistance zone between $63.9K and $64.8K. A sustained bullish momentum could see BTC test the next resistance target of $69.7K. Should BTC pull back, the support level is at $56.5K. The price of BTC is close to the upper Bollinger Band, and the RSI level is at 64.52, both indicators of potentially overbought conditions. Traders should watch the price of BTC to observe if the breakout sustains and be cautious of a short-term pullback or consolidation.

On the other hand, ETH price is currently trading at $2.6K, within an area of consolidation with the upper boundary representing the resistance zone of $2.7K and $2.8K, and the lower boundary representing the support level of $2.2K. The RSI level is at 53.21, indicating a potential slowdown in buying pressure. Traders should watch out for any catalysts that would result in ETH breaking out above resistance for further gains or rejection and a pullback toward the $2.2K support levels.

Access institutional-grade commentary on TradFi × Crypto markets

By TRHX Research

Daily Readings

TradFi

• China cuts banks' reserve ratio as economic growth sputters

• Core inflation in Japan's capital matches BOJ target

• Oil prices fall as expectations of higher supplies hammer market sentiment

• Swiss National Bank hints at further rate cuts after latest reduction

• Low weekly US jobless claims, robust corporate profits highlight economy's resilience

• US second-quarter economic growth unrevised; GDI revised sharply higher

• US core capital goods orders rise in August

• China vows 'necessary spending' to hit economic growth target

• War and weather weigh on economic growth again, says EBRD

• Dollar drops as data boost fades; Swiss franc gains following rate cut

• Saudi Arabia ready to abandon $100 crude target to take back market share

• Legal challenges to North Sea oil projects gather pace after court ruling

Crypto

• Curve Finance Mulls Removing TrueUSD as Collateral for Stablecoin Curve USD

• Crypto Inspired by 'Moo Deng' Zooms to $100M as Hippo Meme Takes Over Internet

• Celo Challenges Tron's Leadership in Active Stablecoin Addresses

• Ethena plans to launch new stablecoin backed by BlackRock's tokenized BUIDL fund

• Core blockchain surpasses $400 million TVL, leading the charge in Bitcoin Layer 2 scaling solutions

• Examiner finds Sullivan & Cromwell didn't ignore 'red flags' that would've tipped them off to FTX's misconduct

• US Foreign Affairs Committee passes resolution demanding Binance exec Tigran Gambaryan's release in Nigeria

• Bitcoin miner Hut 8 expands AI push with new 'GPU-as-a-Service' cluster

• Bitdeer and TSMC to launch state-of-the-art mining chip after successful test

• Crypto losses due to hacks and scams fall to $413 million in Q3: Immunefi

• SEC Chair Gensler plugs changes to exchange definition that worries crypto

• QED, Nexus aim to bring smart contracts to Dogecoin

• Tornado Cash Dev Roman Storm’s Criminal Case Will Proceed to Trial, NY Judge Orders

• Avalanche Unveils $40M Grant Program Ahead of 'Avalanche9000' Upgrade

Deal Flow

• Solana DePIN Mawari Network raises $10.8 million in new funding

• Initia raises $14 million Series A at $350 million token valuation

Yours sincerely,
TRHX Research (Formerly Treehouse Research) 🌳