BTC

ETH

S&P Futures 500

$69,918.60

$3,597.44

$5,286.50

(+4.98%)

 (+4.85%)

(-0.10%)

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

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February 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • China bans Intel and AMD chips for all government computers; Gold near record high as market anticipates inflation data (More in Macro & TradFi)
  • LSE plans to introduce BTC and ETH ETNs in May; FTX to sell $884M worth of Anthropic shares (More in DeFi & CeFi)
  • Bitcoin's pre-halving surge driven by major investors; ETF demand shifts market dynamics (More in On-Chain)
  • BTC’s ATM IVs show increased divergence; Most signals point towards cautious medium-term strategies (More in Crypto Derivatives)
  • BTC and ETH show consolidation; Key Fibonacci levels indicate potential resistance and support (More in Crypto Technical Analysis)

Macro & TradFi

China has implemented new procurement guidelines that effectively exclude processors from US giants Intel and AMD from use in government computers and servers. The rules, which also target Microsoft’s Windows operating system and foreign database software, are part of a broader push by Beijing to favor domestically produced alternatives and bolster China’s independence in critical technological sectors. The shift comes in the wake of the stringent US export controls aimed at curtailing China's access to advanced semiconductor technologies. The US has consistently tightened restrictions, impacting companies like Huawei and SMIC, to prevent potential military application of advanced chips by China. In response, China has seen a surge in revenue for its local chip equipment manufacturers, driven by the national push for technological self-sufficiency.

Meanwhile, gold prices continue to hover near record highs as markets await the forthcoming release of US inflation data, which could potentially clarify the Federal Reserve's interest rate trajectory. The upcoming core personal consumption expenditures index, expected on Good Friday, may reveal persistently high inflation rates for February. Investor expectations for a rate reduction by June have seen a slight decline, with swaps markets indicating a 65% probability, down from 69% last week, influenced by comments from Fed Bank of Atlanta President Raphael Bostic, who foresees only one rate cut in 2024. Despite these adjustments in market sentiment, gold's price is sustained near peak levels, suggesting anticipation for the Fed's shift towards a more accommodating monetary policy. Concurrently, the slight retreat of the U.S. dollar, influenced by the People's Bank of China's firmer yuan reference rate, has provided additional support to gold prices. Currently, spot gold steadies as the market continues to navigate the interplay between inflationary pressures and policy responses.

In Monday's trading session, U.S. equities showed a mixed performance following significant weekly gains, with the Dow Jones Industrial Average dropping by 0.41%, the S&P 500 Index falling 0.31%, and the Nasdaq decreasing by 0.27%. Semiconductor stocks, including Nvidia and Micron Technology, offered some support to the Nasdaq, with Nvidia advancing by 0.76% and Micron Technology jumping 6.28% to a record high of $117.04. Intel and AMD shares declined by 1.74% and 0.57% respectively due to China’s new regulations. Market sentiment is cautious as investors await the release of the U.S. Personal Consumption Expenditures price index for February, which could influence the Federal Reserve's rate cut timeline. Currently, the probability of a rate cut in June has risen to 71.9%, as per CME's FedWatch Tool.

CeFi & DeFi

  • LSE plans to Introduce ETNs for BTC and ETH on May 28th
  • FTX to sell $884M of Anthropic shares to two dozen institutional investors
  • Coinbase International sees record daily trading volume in March
  • SEC plans to ask for $2 billion in fines from Ripple Labs
  • Binance blocked by Philippine regulators

The London Stock Exchange announced plans to introduce a market for BTC and ETH exchange-traded notes (ETN) on May 28, with applications for trading opening on April 8. Subject to approval from the U.K. regulator, the Financial Conduct Authority (FCA), the market will cater exclusively to professional investors. This initiative follows the FCA's recent decision not to reject requests from Recognized Investment Exchanges (RIEs) to establish a listed market segment for ETNs. The move reflects broader efforts by regulators to foster a more crypto-friendly environment in the country, aligning with the U.K. government's aspirations to position itself as a leading crypto hub.

In other news, the FTX bankruptcy estate has struck a lucrative deal to sell the majority of its shares in the artificial intelligence startup Anthropic to raise a staggering $884 million. The sale, documented in court filings on Friday, involves prominent institutional investors, with the top buyer being ATIC Third International Investment Company, an entity backed by Abu Dhabi's sovereign wealth fund, Mubadala. This sale represents a major triumph for the FTX estate, which pledged to reimburse customers fully following the exchange's collapse. This news propelled FTX's FTT token by 10%, underscoring investor confidence in the deal's significance.

On-Chain

According to Santiment, Bitcoin experienced a significant price surge, reaching $70,000, which surprised many traders. This rally was largely fueled by whale  Bitcoin investors who, on a single Sunday, amassed 51,959 bitcoins, equating to 0.263% of the total circulating supply. This notable accumulation occurred as the market approaches the Bitcoin halving event slated for April 20th, suggesting that the wallets of these key stakeholders are likely to expand further in the coming weeks.

Elsewhere, according to Glassnode, the Bitcoin halving event is traditionally seen as a catalyst for bull markets due to the reduced pace at which new bitcoins are minted, halving miners' rewards and consequently diminishing the supply of new bitcoins entering the market. This mechanism is expected to decrease selling pressure from miners and, combined with the scarcity it creates, historically precedes a rise in Bitcoin prices. However, the current market landscape deviates from past patterns, with the impact of newly mined bitcoins diminishing in significance relative to the substantial demand from ETFs. Glassnode's data illustrates that ETFs are absorbing a volume of Bitcoin far exceeding the daily output, suggesting that traditional scarcity effects are potentially overshadowed by institutional demand.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH consolidating at 76.18% and 77.51%, respectively.
  • The 30-day 25-delta skew (C-P) for both BTC and ETH increased to 3.48% and 0.51%, respectively.
  • The futures market witnessed $182.68M in liquidations, with shorts representing 67.1%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

54.54%

DOGE

OKX

dYdX

45.59%

DOGE

Binance

dYdX

38.20%

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.

Bitcoin (BTC) ATM Implied Volatility (IV) chart shows the 7-day and 30-day maturities have diverged further, currently at 66.39 and 75.42 respectively. The spike in short-term volatility expectations could be a response to speculation over BTC price movement in the coming days. The increase suggests that traders are bracing for more significant price movements or uncertainty in the coming days. Should the divergence persist or widen, it could indicate that the market is anticipating short-term events such as the US GDP growth rate announcement as well as core personal consumption expenditure reports and is hedging against it.

The term structure depicted in the chart shows a contango shape which indicates that the market expects higher uncertainty or potential for volatile events in the long term compared to the short term. The short-term IV dips significantly below the longer-term forecasts, which could point to a market consensus of a very near-term stabilization or lack of immediate impactful events. However, as we look further out, the IV gradually increases, suggesting that traders anticipate a rise in risk or volatility in the future which reflects a market that is currently calm but cautious about the long-term outlook, prompting a higher premium on options that expire further in the future.

Today's BTC's 25 Delta skews illustrate a continued increase in 7-day and 30-day constant maturities from yesterday. The overall higher levels of both 7-day and 30-day IVs suggest that option investors are increasingly bullish on the price of BTC, having a favorable outlook on the price over the next 30 days. 

In today's trading session, @Paradigm reported for BTC, a 417x Call Spread for 26-Apr-24 with strikes at $90K/$105K, a 400x Call for 26-Apr-24 at $66K, a 250x Call Calendar for 29-Mar-24 at $70K and 12-Apr-24 at $72K, a 175x Call Spread for 28-Jun-24 with strikes at $85K/$105K, and a similar Call Spread for 26-Apr-24 at the $90K/$105K. For ETH, a 6000x Put for 5-Apr-24 at $3.1K, along with a 3000x Call for 12-Apr-24 at $4.1K, a 2000x Put for 29-Mar-24 at $3.5K, a 1043x custom Put for 29-Mar-24 at $3.1K and a Put at $3.4K and a 1000x Put for 5-Apr-24 at $3.2K.

Crypto Technical Analysis

In technical analysis, BTC’s price stabilized around the $70K level, with recent price action reflecting a break above the consolidation phase within a defined range. The Fibonacci retracement levels, drawn from a recent swing high to swing low, indicate that the price is currently testing the 0.618 level at approximately $70K, a region that often acts as a significant psychological barrier. A breach of this threshold could clear the path towards the next notable resistance at $73K, a 4.3% increase. On the downside, should the $70K level not hold, the next level of support is identified near the 0.382 Fibonacci level at around $66K, which translates to a potential decrease of approximately 5.7%.

Moving to ETH, similar price action has unfolded, showing resilience at the $3.6K level, a significant psychological and technical juncture. The Fibonacci retracement tool, applied from the local peak to the trough, indicates that the price has just surpassed the 0.5 level at $3.6K, which serves as a pivot point for traders. Should Ethereum consolidate above this level, the next notable resistance to watch would be near the 0.786 Fibonacci retracement level at approximately $3.7K, representing a potential upside of 2.8%. Conversely, if the price retraces, the next clear support appears near the 0.382 Fibonacci retracement level at around $3.5K, implying a possible 2.9% decline from current pricing.

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