BTC

ETH

S&P Futures 500

$61,790.32

$3,390.72

$5,540.00

(+2.38%)

 (+1.41%)

(+0.40%)

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

GM Treehouser 🌳


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May 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • HKEX CEO states the importance of more RMB-denominated securities; Volkswagen strikes a potential $4B investment in Rivian Automotive (More in Macro & TradFi)
  • VanEck's Ether ETF filing progresses amid political interest; Blast network announces the token airdrop (More in DeFi & CeFi)
  • German Government’s wallet transferred 900 BTC to 3 separate addresses;  BTC LTHs represent 40% of profit taken by investors (More in On-Chain)
  • DVOL decreases for both BTC and ETH; Over 60% of liquidations were shorts (More in Crypto Derivatives)
  • BTC and ETH rebounded from crucial support zones with neutral RSI levels (More in Crypto Technical Analysis)

Macro & TradFi

Bonnie Chan, CEO of Hong Kong Exchanges and Clearing Limited (HKEX), emphasized the need for broader applications of China’s yuan (RMB) to enhance its global usage, particularly in financial markets dominated by the U.S. dollar. Speaking at the World Economic Forum in Dalian, Chan highlighted the importance of RMB-denominated securities like bonds and equities as vehicles for global investors to store wealth. HKEX has been proactive in this effort, introducing initiatives like the HKD-RMB Dual Counter Model to facilitate trading in Hong Kong dollars or Chinese yuan. Despite progress, Fred Hu of Primavera Capital cautioned that full internationalization of the yuan may take longer due to China's closed capital account and the maturity needed in its financial markets. The panel also discussed the role of patient investing and stable policies in fostering market stability and attracting global investors, underscoring the ongoing efforts to revitalize Chinese IPOs amid regulatory scrutiny.

In other news, Rivian Automotive Inc. has secured a significant financial boost through a new partnership with Volkswagen AG, marking a pivotal moment amid challenges in the electric vehicle (EV) market. Volkswagen will initially invest $1 billion in Rivian and potentially up to $4 billion more over time, gaining access to Rivian’s technology for developing next-generation EVs and software. This infusion follows Rivian’s struggles with production delays and financial losses, prompting it to halt plans for a new manufacturing plant earlier this year. The partnership with VW aims to enhance Rivian’s capabilities while VW gains crucial EV expertise, marking a strategic shift for both companies amid a challenging EV landscape.

On Tuesday, U.S. stocks experienced a mixed session with a slight pullback in US consumer confidence and elevated housing prices. The Nasdaq Composite rose 1.3% and the S&P 500 gained 0.4%, buoyed by a strong rebound in Nvidia shares, which surged more than 6% following a recent correction in AI and semiconductor stocks. This recovery helped lift the S&P 500 into positive territory for the day, highlighting Nvidia's significant impact on broader market movements. Meanwhile, the Dow Jones Industrial Average fell 0.8%, ending a five-day winning streak. Tech giants like Alphabet also contributed to the Nasdaq's rise, closing at a record high. Conversely, stocks exposed to the U.S. housing market, including Home Depot and Pool Corp., faced declines after a downgrade in full-year guidance from Pool Corp. Treasury yields remained stable, while consumer stocks lagged across both the S&P 500 and Nasdaq indexes.

DeFi & CeFi

  • VanEck submits form 8-A for spot ETH ETF
  • Blast airdrop distributes 17% of the supply to early users
  • German government offloads 900 Bitcoin
  • SEC chair Gensler criticizes crypto sector for non-compliance and high centralization
  • Colosseum raises $60M to invest in early-stage projects
  • Michael Kane, the former CEO of Hydrogen Technology Corporation, sentenced to roughly 3.75 years

VanEck has filed form 8-A for its spot Ether ETF with the United States Securities and Exchange Commission on June 25, moving the market closer to ETH ETFs' official launch. Senior Bloomberg ETF analyst Eric Balchunas speculates that trading could begin as early as July 2, 2024, based on a similar timeline seen with VanEck’s Bitcoin ETF. Balchunas' prediction aligns with the lack of significant SEC commentary on ETF applicants' S-1 filings, suggesting no major issues have been identified. However, SEC Chair Gary Gensler indicated that the approval process might extend to September 2024, depending on applicant response times. The potential approval of the Ether ETF reflects the heightened political interest in cryptocurrencies amid the 2024 election year, with pro-crypto voter engagement becoming increasingly significant.

Elsewhere, the Blast network announced that it will launch a token airdrop on June 26, distributing 17% of its total supply to early adopters. This includes 7% for users who bridged assets like Ether or US Dollar Blast to the network and another 7% for contributors to its decentralized applications. Additionally, 3% will go to the Blur Foundation for future airdrops. Wallets ranked in the top 1,000 based on points will have their tokens vested over six months. Blast is the fourth largest Ethereum layer-2 network, with a total value locked of over $2.9 billion since its launch in November. The airdrop is part of a broader plan to distribute 50% of the total token supply to the community, with future phases to be announced. Some users have expressed dissatisfaction with the vesting requirements, though many remain optimistic about the network's future.

On-Chain

An analysis by lookonchain highlighted on-chain movement of funds from the German Government’s wallets. Specifically, the German Government transferred 900 BTC worth $54.75M to three addresses; 500 BTC to a private address, 200 BTC to a Kraken address, and 200 BTC to a Coinbase address. With a current balance of 46,359 BTC worth $2.83B, traders should be cautious of the upcoming potential volatility of BTC, given that this period also coincides with the repayment of Mt. Gox to debtors.

On-chain analysis by Glassnode suggests a potential shift in BTC’s supply and demand - recent price drops have pushed the spot price below the cost basis of short-term holders, indicating a possible deeper correction. Long-term holder (LTH) spending has been elevated for a period of time, similar to past bull market pre-euphoria phases. Though LTHs contribute a small portion of daily trading volume of around 4%-8%, their realized profits can be significant, accounting for up to 40% of total market profit taking. Therefore, monitoring long-term holder behavior provides valuable insights into potential turning points in the market.

Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC dropped to 47.31% while that of ETH fell slightly to 61.44%.
  • The 30-day 25-delta skew (C-P) for BTC rose to 1.10 while that of ETH increased to 5.46.
  • The futures market witnessed $87.01M in liquidations on Monday, with shorts representing 64.8%.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

21.70%

BTC

Bybit

dYdX

18.46%

ETH

OKX

Binance

18.04%

ETH

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.

Today's BTC implied volatility (IV) chart for ATM maturities shows a noticeable decline for BTC’s 7-day IV, suggesting a reduction in short-term volatility expectations. This downturn suggests that traders might have overreacted to the initial expectations for Mt Gox repayments, seeing a period of stabilization in the near future moving from yesterday’s reaction. The longer maturities remain stable, reinforcing the view that the market expects calmer conditions to prevail in the medium to long term.

Today's BTC Shadow Term Structure graph shows a sharp initial drop in IV for short-term tenors, followed by a gradual stabilization that aligns closely with yesterday’s term structure. This initial drop and subsequent stabilization suggest a quick recalibration of short-term volatility expectations, possibly due to the market pricing in Mt. Gox repayment.

Today's BTC skew chart for both the 7-day and 30-day skews demonstrates a subtle increase as we look toward the tail end of the graph. This trend suggests a gradual shift towards more balanced or slightly cautious sentiment among traders, with a small rise in the preference for options that protect against or benefit from a price increase. Despite this uptick, the overall market remains relatively stable without dramatic shifts, indicating a steady market environment with controlled volatility expectations in the short to medium term.

Lastly, @Paradigm option flows highlighted notable BTC trades, including selling 200x July 26, 2024, $67K/$69K Call Spreads and buying 200x September 27, 2024, $100K Calls. Additionally, 115x Iron Condors (buying and selling calls and puts with different strike prices) for July 12, 2024, spanning $58K to $66K were bought, reflecting a range-bound strategy. In the ETH market, significant activities were observed with the purchase of 5,375x July 26, 2024, $3.5K/$3.9K Call Spreads and the sale of 4,712x July 26, 2024, $3.6K/$3.8K Call Spreads, indicating varied expectations for near-term price movements.

Crypto Technical Analysis

On the 4-hour chart, BTC rebounded to $61.9K after briefly breaching the support level of $60.7K. The price action suggests the significance of this critical support level in the range of $60.7K to $59.6K. Conversely, resistance is positioned at $64.5K, a 6.2% upside. The RSI supports this trend as it reversed from a bearish level of 12.8 to a neutral level of 44.9. Traders should be aware of any upcoming catalyst that could indicate the market sentiment of BTC.

Similarly, ETH rebounded from the support level of $3.2K to the current price of $3.4K. Should the support at $3.2K fail to hold, the subsequent support level is at $3K, representing a potential decline of 11.7%. Should market sentiment turn bullish, resistance is identified at $3.6K. The RSI is at 48.23 after the market sentiment reversed from a bearish level of 23.06 to a relatively neutral sentiment, indicating that any future ETH catalyst would likely dictate the market sentiment of ETH.

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Treehouse Research 🌳