BTC

ETH

S&P 500 Futures

$65,452.00

$2,647.50

$5,795.50

(-0.66%)

 (-0.74%)

(+0.13%)

Note: All percentages shown above are referenced to the previous business work day's 09:00 (GMT+8)

GM 🌳

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August 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • Major Chinese cities ease homebuying rules; Key inflation gauge in August at 2.2% (More in Macro & TradFi)
  • FTX bankruptcy estate clarifies rumors on reimbursement distribution date; Former Chinese finance minister urges crypto study after US Bitcoin ETF shift (More in DeFi & CeFi)
  • Pump.fun deposits to Kraken to potentially take profit; Percentage of BTC supply in profit mimics the trend in previous bull markets (More in On-Chain)
  • Bitcoin's ATM implied volatility has surged; Traders appear to anticipate short-term volatility, longer-term stability (More in Crypto Derivatives)
  • Both BTC and ETH makes a slight retracement on Monday morning following days of gains (More in Crypto Technical Analysis)

Macro & TradFi

In an effort to stabilize its struggling property market, China’s largest cities—Guangzhou, Shanghai, and Shenzhen—have eased homebuyer restrictions and lowered down payment ratios, aligning with the central government's recent directive to boost the real estate sector. Guangzhou eliminated all restrictions on homebuyer eligibility and ownership limits, while Shanghai and Shenzhen relaxed purchasing rules in suburban areas and reduced minimum down payments for first and second homes to 15% and 20%, respectively. This follows a broader national initiative unveiled in late September, which reduced borrowing costs on up to $5.3T in mortgages and aimed to reverse a sharp decline in new-home prices. Additionally, China's central bank announced measures to allow mortgage refinancing starting November 1, targeting both first and second-home buyers to reduce interest expenses and alleviate debt burdens. These moves underscore China’s urgency to address a housing-led economic slowdown amidst global economic uncertainty. Major banks, including state-owned institutions, are expected to finalize refinancing guidelines by mid-October.

Meanwhile, inflation in the U.S. moved closer to the Federal Reserve's 2% target in August, as the personal consumption expenditures (PCE) price index rose by just 0.1%, bringing the annual inflation rate to 2.2%, down from 2.5% in July. Core PCE, which excludes food and energy and is more closely monitored by the Fed, also increased 0.1% for the month, while the year-over-year rate held steady at 2.7%. This progress toward lower inflation provides more room for future interest rate cuts, aligning with the Fed’s recent shift in focus toward supporting the labor market, which has shown signs of softening. Personal income and spending both came in lower than expected, rising 0.2% for the month, while housing-related costs continued to exert upward pressure. The Fed recently cut its benchmark interest rate by half a percentage point and has signaled more rate reductions are likely, though markets anticipate a more aggressive rate-cutting path. 

Lastly, on Friday, U.S. stock indexes had a mixed performance as investors processed inflation data, which strengthened expectations of continued rate cuts by the Federal Reserve. The Dow Jones Industrial Average rose 0.3% to reach a record high, while the S&P 500 slipped by 0.1% and the Nasdaq Composite dropped 0.4%, ending a four-day winning streak. Nvidia, a key driver of recent market gains, fell 2.1%, leading a broader selloff in semiconductor stocks, including declines in Marvell Technology, Broadcom, and KLA Corp. Meanwhile, U.S.-traded Chinese stocks continued to rise as authorities in China rolled out stimulus measures, with Alibaba, PDD Holdings, and JD.com contributing to a 20% weekly gain for the iShares MSCI China ETF. Investors will be looking out for Fed Chair Powell’s speech due today at 17:55 SGT, along with the US September ADP employment data on 2 October, and September unemployment rate and seasonally adjusted non-farm payrolls on 4 October.

DeFi & CeFi

  • FTX bankruptcy estate clarifies rumors on reimbursement distribution date
  • Former Chinese finance minister urges crypto study after US Bitcoin ETF shift
  • SEC files ‘settled charges’ against Mango Markets operators 
  • Canada crypto exchanges get more time for stablecoin compliance

The FTX bankruptcy estate has reported total claims exceeding $11B as a court hearing to confirm its restructuring plan approaches. Despite rumors on social media suggesting that reimbursement funds would be distributed to creditors and customers on September 30, 2024, these claims are unfounded, as the reimbursement plan has yet to receive court approval. The next hearing, overseen by Judge John T. Dorsey of the U.S. Bankruptcy Court for the District of Delaware, is scheduled for October 7, 2024. If approved, smaller claimants with losses under $50K may receive distributions by the end of 2024, while those with larger claims may have to wait until early to mid-2025. Disputes have arisen regarding whether reimbursements should be made in cash or in-kind assets, with FTX's attorneys advocating for cash payments to comply with Chapter 11 laws. The current plan specifies reimbursements based on the date of the legal petition, which could be influenced by Bitcoin's price at that time, potentially giving their creditors only 10-25% of their crypto as compared to what it is worth now.

In other news, during the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing, former Chinese finance minister Lou Jiwei emphasized the need for China to closely monitor advancements in cryptocurrency. He raised concerns about the risks cryptocurrencies pose to financial stability, particularly their volatility and potential use in money laundering and terrorism financing. Lou noted the recent shifts in the U.S. stance toward cryptocurrencies, particularly following the SEC's approval of spot Bitcoin ETFs, warning of the implications these developments could have on global markets. He urged Chinese policymakers to consider these international changes and study the associated risks and innovations within the digital economy. Despite China’s ban on Bitcoin mining and trading since 2021, it still controls over 55% of the Bitcoin mining network through mining pools. However, this dominance is reportedly shifting toward U.S. mining firms, which now manage about 40% of all Bitcoin mining operations, primarily serving institutional miners.

On-Chain

According to @lookonchain, the pump.fun address has deposited an additional 122,250 SOL to Kraken over the past 5 days, worth approximately $18.9 million. This may indicate profit-taking activities by the team. Additionally, a Dune dashboard reveals that the pump.fun team has generated $120 million in revenue to date, with approximately $62 million sold.

In an analysis by CryptoQuant, the sustained high level of Bitcoin (BTC) supply in profit is an important indicator for assessing the potential for a bull market. Historically, when BTC supply in profit has remained above 80%, it often signals a bullish cycle. Although there have been instances where it dipped below 80%, these drops typically presented opportunities to buy at lower prices. Currently, the BTC supply has generally stayed above this threshold, with brief declines during the summer, which have also been viewed as buying opportunities.

Derivatives

  • Funding rates for both BTC and ETH remained positive. 
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH moved slightly higher to 53.70% and 61.70% respectively.
  • The 30-day 25-delta skew (C-P) for BTC rose to 1.54 while ETH recovered to -0.06, respectively.
  • Over the weekend, the futures market witnessed $134.23M in liquidations in the last 24 hours, with longs representing 63.23%.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

16.89%

AVAX

OKX

dYdX

13.95%

AVAX

Binance

dYdX

12.23%

AVAX

Bybit

dYdX

Notes:

1) Pairs observed include BTC, ETH, SOL, BNB, XRP, LTC, and DOGE vs. USDT perps. 

2) CEXs observed include Binance, Bybit, OKX & dYdX.

3) Lookback period is 24 hours.

BTC ATM IVs have experienced a notable increase, especially for the 7-day IV which has noticeably diverged from 30-day IV. This is possibly due to the incoming US jobs market data due this week, which could revive recession fears, while strong jobs growth may result in worries that the Fed will not be as aggressive in cutting rates as expected.

BTC's term structure continues to exhibit a contango pattern, with a slight rise in IV at the front end of the curve, which suggests traders expect heightened short-term volatility while maintaining expectations of long-term price stability for BTC.

The call-put skew has risen significantly, with the 30-day skew at 1.54 and the 7-day skew at 0.35. The 30-day implied volatility (IV) is approaching its monthly peak, suggesting growing market optimism about Bitcoin's future trajectory. 

Lastly, @Paradigm highlighted a trading session with mixed flows. Key BTC trades encompassed the procurement of 841x 25-Oct-24 77K/84K Call Spreads, 640x 27-Sep-24 62K Puts, and a singular transaction that involved the sale of 537x 27-Dec-24 62K/90K Bear Risk Reversals. In the ETH space, notable trades included the purchase of 7500x 4-Oct-24 $2.9K Calls, 5000x 4-Oct-24 $3K Calls, and the sale of 4000x 25-Oct-24 $2.7K Calls

Crypto Technical Analysis

In the realm of technical analysis, Bitcoin has experienced a slight pullback after days of gains, currently trading around the $65K mark without clear breakout signals. If the price continues to decline, the next significant support level is at $64.3K, which has transitioned from a previous resistance level and aligns with a rising trendline formed by higher lows. Conversely, if Bitcoin rebounds from this support, the next major resistance level is at $70K, presenting a potential gain of nearly 8%.

On the other hand, ETH has also seen a slight retracement, currently trading just above $2.6K. It is at a critical support zone that combines psychological support with an ascending trendline. A definitive break below this level could lead to a decline to the next support at $2.45K, which aligns with the 200-period simple moving average (SMA). However, if bullish momentum returns, ETH may retest the resistance level at $2.68K.

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TRHX Research (Formerly Treehouse Research) 🌳