BTC

ETH

S&P 500 Futures

$62,874.00

$2,626.25

$5,771.50

(-1.00%)

 (+1.41%)

(-0.10%)

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

GM 🌳

Welcome to the TRHX Pulse newsletter (formerly Treehouse Daily), where TRHX delivers your daily dose of financial news and insights for free! We believe you'll find it both informative and valuable.

Also, in case you have missed it, check out our latest research piece 👇

August 2024 Market Recap

You can also access our research articles on the Bloomberg Terminal with the command “NH TRH < GO >"!

Our Daily View

What We Are Covering Today

  • China plans 50 bps RRR cut; U.S. business activity steady, manufacturing at 15-month low. (More in Macro & TradFi)
  • Polymarket seeks $50M funding; Celestia raises $100M to scale (More in DeFi & CeFi)
  • Bitcoin shows potential for a rally; key short-term and long-term on-chain indicators signal bullish momentum (More in On-Chain)
  • BTC continues to see decline in IV as the market sees a slight correction from recent surge (More in Crypto Derivatives)
  • Bullish momentum for BTC and ETH slows down as prices pull back from key resistance levels and RSI declines (More in Crypto Technical Analysis)

Macro & TradFi

China’s central bank, the People's Bank of China (PBOC), plans to cut the reserve requirement ratio (RRR) by 50 basis points by the end of the year, reducing the amount of cash banks must hold. This move, alongside a 0.2 percentage point reduction in the 7-day repo rate, aims to inject liquidity into the economy and stimulate growth. The announcement follows recent monetary easing by the U.S. Federal Reserve, giving China room to adopt similar measures in response to slowing economic growth, deflationary pressures, and a struggling real estate sector. 

Meanwhile, U.S. business activity remained steady in September, with the S&P Global Composite PMI at 54.4, indicating continued expansion in the private sector. Prices for goods and services increased at the fastest rate in six months, driven primarily by rising wage costs in the services sector. While the services sector maintained steady growth, manufacturing activity declined to a 15-month low. Despite signs of cooling inflation earlier in the year, the recent increase in price pressures may influence future monetary policy decisions.

Lastly, U.S. stocks closed slightly higher on Monday as investors assessed the impact of the Federal Reserve’s recent rate cut. The Dow rose by 0.15%, the S&P 500 gained 0.28%, and the Nasdaq edged up by 0.14%. Comments from Fed policymakers supporting additional rate cuts, combined with steady U.S. business activity data, contributed to market sentiment. Energy stocks led sector gains, while healthcare declined. Intel shares rose on reports of a potential $5 billion investment, while General Motors slipped after a stock downgrade. Investors are now focused on the upcoming inflation data, which could influence further Fed decisions.

DeFi & CeFi

  • Polymarket seeks $50M in funding and plans to issue token
  • Celestia raises $100M
  • Mango Markets Mulls CFTC Settlement Over Crypto Trading Violations
  • Treasure DAO approves migration to ZKsync

Polymarket is reportedly seeking $50 million in new funding, with plans to potentially issue its own token. The token would allow users to make bets on outcomes of real-world events, though it's unclear how this might affect the platform's current use of UMA Protocol for resolving disputes. Polymarket has seen significant growth, particularly with U.S. election betting, where nearly $1 billion has been staked. This success comes despite regulatory hurdles, including restrictions on U.S. users. The CFTC has expressed concerns about offshore platforms like Polymarket, with Chairman Rostin Benham warning of possible enforcement action if legal boundaries are crossed. 

In other news, the Celestia Foundation has raised $100 million in a funding round led by Bain Capital Crypto, bringing its total financing to $155 million. Other participants in the round include Syncracy Capital, 1kx, Robot Ventures, and Placeholder. Launched in October 2023, Celestia is designed to help other blockchains scale by using data availability sampling, allowing users to verify large blocks without needing to download all the data. The network is working to further scale its block capacity to 1 gigabyte, significantly larger than Bitcoin’s average block size of 1-2 megabytes. Since its launch, approximately two dozen roll ups have deployed on Celestia.

On-Chain

On-chain analyst Checkmate suggests that Bitcoin is showing potential for a rally if its Short-Term Holder (STH) Market Value to Realized Value (MVRV) surpasses its 155-day moving average, a historically bullish signal. He notes that if Bitcoin reaches a weekly higher high around $65.3k, an attempt to reclaim the all-time high (ATH) is possible. However, he emphasizes that profit-taking behavior by short-term holders, particularly between $66.1k and $70.8k, will be a critical factor to monitor. The profit-taking behavior highlights the importance of tracking short-term market participants in determining the rally's strength and sustainability.

According to Avocado_onchain's analysis from CryptoQuant, several key long-term on-chain indicators suggest a positive outlook for Bitcoin. The 7-day SMA of the Fund Flow Ratio has rebounded from the critical 0.05 support level, historically marking the end of bear markets and the beginning of significant price increases. Additionally, the 30-day SMA of the Estimated Leverage Ratio has reached a key support zone and is showing upward momentum, bolstered by factors like futures ETFs and Bitcoin options trading. The 30-day EMA of Binary CDD signals accumulation by long-term holders, which typically precedes the end of a bull market.

Derivatives

  • Funding rates for BTC and ETH remain positive. 
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH declined slightly to 50.51% and 60.51% respectively.
  • The 30-day 25-delta skew (C-P) for BTC increased to 1.20 while that of ETH decreased to -0.64.
  • The futures market witnessed $121.29M in liquidations in the last 24 hours with shorts representing 57.72%.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

24.68%

BNB

Binance

OKX

22.00%

BNB

Bybit

OKX

8.58%

AVAX

OKX

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.

In the last 24 hours, BTC has continued to see a decline in implied volatilities (IVs) as the price corrected slightly back to the $63K level following a recent surge. Notably, the shorter 7-day IV has dropped significantly from a peak of 63.55 to its current level of 57.17. This suggests that the market may anticipate BTC will consolidate in this range in the short term, accompanied by low volatility.

The BTC term structure reflects a similar trend, with the overall curve maintaining a contango shape despite a decline in IV across different tenors. Specifically, the shortest-dated options have experienced the largest decline, with 1 to 3-day expiry options showing a significant difference of 5.1% to 6.4%.

The call-put skew, however, has shown minimal changes from the previous day. Both 7-day and 30-day skews remain in neutral territory and display a slight positive skew. This indicates that the market continues to be uncertain about BTC's future direction.

Lastly, @Paradigm highlighted a trading session with generally bullish flows through call buying. Key BTC trades encompassed the purchase of 350x 24-Sep-24 $66K Call and 250x 25-Oct-24 $77K Call. Meanwhile, in ETH, notable transactions included the sale of 3,000x 25-Oct-24 $2.7K Call.

Crypto Technical Analysis

Moving on to technical analysis, the price of BTC retraced after reaching the upper boundary of the resistance zone at $64.7K, pulling back to $63K. The support level is approximately $55.7K, representing an 11.58% downside. Buying pressure in the BTC major has weakened as indicated by the RSI levels decreasing to a neutral level of 50.70. This shows that traders are slowing down in their purchases and sellers are capitalizing on the recent gains in BTC.

On the other hand, ETH displayed a similar pull-back in price from the recent high of $2.7K to $2.6K, indicating potential selling pressure in that price range. The immediate support level is at $2.2K, which is critical to watch. The RSI level declined to 60.20, showing that while bullish momentum has slowed, it is not completely exhausted. The market remains cautiously bullish, but traders should be cautious of a potential break-out above this resistance or pull-back towards the $2.2K support level.

Access institutional-grade commentary on TradFi × Crypto markets

By TRHX Research

Daily Readings

TradFi

Crypto

Deal Flow

Yours sincerely,
TRHX Research (Formerly Treehouse Research) 🌳