BTC

ETH

S&P Futures 500

$26,673.25

$1,630.00

$4,503.50

(+0.75%)

 (+1.04%)

(-0.05%)

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

GM Treehouser 🌳

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August 2023 Market Recap

Our Daily View

What We Are Covering Today

  • China Evergrande shares plunge as employees detained; Oil prices near $95 per barrel (more in Macro & TradFi)
  • Judge refrains from ruling in SEC-Binance document dispute; Hong Kong police arrest 6 individuals after JPEX probe (more in DeFi & CeFi)
  • ETH ICO whale deposits $9.96M to Kraken; Bitcoin reaches yearly high in daily active addresses (more in On-Chain)
  • Term structure remains in contango; BTC skews suggest slightly more positive sentiment (more in Crypto Derivatives)
  • BTC approaches 28K resistance; ETH tests support, facing challenges from its bull market band (Crypto Technical Analysis)

Macro & TradFi

China Evergrande Group shares plummeted on Monday following the detention of certain employees from the company's wealth management unit by Shenzhen police. The statement from the police did not provide details on the number of detentions, the charges, or the timing of the arrests. Although the stock initially dropped by 25% in early trading, it recovered some losses, ending 1.6% lower at close. Similarly, Chinese property developer Country Garden must pay $15M in offshore bond interest by Monday's deadline, facing its third close call with default this month. Failure to pay before the grace period ends in mid-October would trigger cross-default terms, according to Sandra Chow, co-head of Asia-Pacific research at CreditSights.

Elsewhere, U.S. Treasury Secretary Janet Yellen stated on Monday that she observed no indications of a U.S. economic downturn. However, she cautioned that Congress’ failure to pass legislation to fund the government could potentially slow down economic momentum. Yellen also noted that while the labor market remained strong, it was cooling compared to previous levels, which was important for reducing inflation to 2%. Traders anticipate that the Fed will likely maintain rates between 5.25% and 5.50%, but hints on the Fed's direction may come from Powell's upcoming press conference on Wednesday afternoon.

U.S. stocks closed with minimal changes on Monday, with investors closely monitoring the Federal Reserve. The DJIA index saw a modest increase of 0.02%, the S&P 500 increased by 0.07%, and the NASDAQ posted a slight gain of 0.01%. In contrast, the 10-year U.S. Treasury yield remained near a 16-year high at 4.31%. Meanwhile, oil prices inched closer to the $95 per barrel mark due to expectations of a third consecutive monthly decline in U.S. oil production from major shale-producing areas in October, reaching its lowest level since May 2023. This decline is compounded by an anticipated supply deficit from production cuts by Saudi Arabia and Russia.

DeFi & CeFi

  • Judge refrains from ruling in SEC-Binance document dispute
  • Hong Kong police arrest 6 individuals after JPEX probe
  • Blockchain Capital closes funds totaling $580M for investments in crypto gaming
  • Citigroup’s Citi Token Services will provide payments, liquidity to institutional customers
  • Unibot integrated with Friend.tech, allowing Friendtech key trading via Telegram

Magistrate Judge Zia Faruqui, in response to an SEC request, refrained from compelling Binance.US to make its executives more accessible for depositions or demanding the SEC to retract document requests. Instead, he encouraged both parties to collaborate on discovery requests and advised the SEC to refine its information demands. Additionally, Judge Faruqui requested that Binance.US provide more information regarding its service provider, Ceffu. This development occurs within ongoing SEC litigation against Binance.US, wherein concerns are raised that Ceffu (formerly Binance Custody) may be serving Binance.US in violation of a prior agreement. Ceffu maintains its independence stance. The SEC has further alleged Binance.US of omitting crucial information, delaying document submissions, and displaying factual inconsistencies. A joint status report from both parties is expected on October 10, with a subsequent hearing scheduled for October 12.

In other news, the Securities and Futures Commission (SFC), Hong Kong's regulatory body, initiated an investigation into the Hong Kong cryptocurrency exchange JPEX, resulting in the arrest of six individuals. This comprises four men and two women, including influencers Joseph Lam Chok and Chan Wing-yee, on suspicion of conspiracy to defraud. The SFC accuses JPEX of operating without the necessary licenses, and the police have received over 1,400 complaints involving approximately $128 million. JPEX has criticized the SFC, claiming unfair treatment, and has attributed liquidity problems to third-party partners freezing funds and seeking additional information, exacerbated by recent negative exposure from the public and institutions. JPEX has reportedly vacated its Taipei office, and its native token, JPC, has experienced a 21% decrease in the last 24 hours.

On-Chain

According to @lookonchain, an Ethereum whale, who participated in its initial coin offering (ICO) and procured 254,908 $ETH at the then price of approximately $0.31 each — now valued at a staggering $422.6M — deposited a sizable 6,000 $ETH (equivalent to $9.96M) into Kraken just under an hour ago. This substantial deposit by an early adopter suggests potential strategic positioning in the market and may signal upcoming shifts in market dynamics that investors should be cognizant of.

As we approach the 6-month mark since the last Bitcoin halving, on-chain data from @santimentfeed reveals a surge in Bitcoin address activity, reaching its peak for the year. Larger Bitcoin holders also appear to maintain a poised stance amidst this bustling activity, suggesting the potential influence and strategic patience of significant $BTC stakeholders, which may foreshadow market stability or shifts driven by their actions.

Crypto Derivatives

  • Funding rate remains positive for BTC and remains negative for ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH increased to 41.53% and 37.02%, respectively.
  • 30-day 25-delta skew (C-P) fell on BTC to 1.39% and rose on ETH to -0.08%.
  • The futures market witnessed $87.30M worth of liquidations in the last 24 hours, with shorts representing 69.58% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

43.68%

SOL

dYdX

OKX

9.29%

BTC

OKX

Bybit

7.15%

BNB

Bybit

OKX

Source: @CexyArbBot Telegram Bot

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.

In the options market, BTC's 30-day implied volatility (IV) slightly increased to 36.46, in anticipation of potential interest rate changes by the Fed during the September meeting, which takes place on Thursday at 2 AM SGT.

Examining the term structure, BTC IVs increased marginally across all tenors but continue to exhibit a contango shape with no significant deviation in shape from yesterday.

BTC's 30-day (call-put) skew has climbed to 1.68%. Simultaneously, the 7-day skew registers at -0.85%. This data indicates traders are adopting a longer-term bullish perspective, while concurrently implementing hedging strategies to mitigate short-term risks.

Lastly, @Paradigm some significant options movements: BTC experienced a steep rally from 26.6k to 27.3k before swiftly dropping back to 26.6k within a 15-minute frame. Noteworthy BTC trades included an 828x 22-Sep-23 26000/28000 Strangle purchase, a 201x 22-Sep-23 26000/25000 Put Spread buy, and a unique 130x 22-Sep-23 27000 Straddle sale. On the ETH front, major trades involved a substantial 6500x 29-Dec-23 1900 Call buy, a 6187x 29-Sep-23 1750/1900 Call Spread acquisition, and a tailored 4000x 29-Sep-23 1900/2300 Call Spread sale. These trades underscore the market's volatility and dynamics on Paradigm’s platform.

Crypto Technical Analysis

In BTC's daily chart analysis, the asset hovers around 26.7K, briefly touching 27.2K overnight before retracing. A breach of this channel may ignite bullish momentum, targeting the 28K resistance, marking a potential 5.59% gain from its current level. However, the recent subtle pullbacks in candle formations over the past three days caution against potential waning bullish strength. BTC's primary support remains anchored at 25.8K. The Relative Strength Index (RSI) is 53.13, indicating a neutral position. Significantly, BTC has tested its bull market support band, which presents formidable resistance to surpass.

Analyzing ETH's daily chart, the asset trades around the 1.63K level, successfully reclaiming its 1.6K support. However, ETH remains distant from its bull market support band, posing a challenge for bullish momentum. While ETH continues to test the 1.6K support, a breach could send it towards the next support at 1.46K, marking a potential 8.97% decline from its current position. Conversely, the critical resistance level stands at 1.95K. The Relative Strength Index (RSI) reads at 46.22, reflecting a continued downtrend in momentum.

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