BTC

ETH

S&P 500 Futures

$68,000.00

$2,400.50

$5,740.50

(-1.05%)

 (-2.06%)

(-0.15%)

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

GM 🌳

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October 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • China reviews proposal to increase local government debt limit; Elon Musk’s $1M daily giveaway clears legal scrutinies in Pennsylvania (More in Macro & TradFi)
  • Kiln partners with Treehouse Protocol as DOR panelist; UK-based pension fund allocates 3% into BTC (More in DeFi & CeFi)
  • TON showcases transactional growth; BTC mining faces sustainability challenges amid rising costs (More in On-Chain)
  • BTC traders brace for post-election volatility with surging 7-day IV; Skew favors BTC over ETH (More in Crypto Derivatives)
  • BTC and ETH declines past immediate support levels with RSI levels nearing oversold territory (More in Crypto Technical Analysis)

Macro & TradFi

During a recent meeting of China's parliament standing committee, a proposal to raise the local government debt limit was reviewed, with state media reporting that new debt would be used to replace hidden debt. Finance Minister Lan Fo’an discussed the plan, indicating that an increase in the local debt limit is forthcoming. Local authorities, responsible for a significant portion of public services spending, have faced financial challenges due to declining revenue from land sales. Estimates suggest that China holds approximately 50 to 60 trillion yuan (about $7 trillion to $8.45 trillion) in hidden debt, with analysts predicting that around 10 trillion yuan in additional debt quotas could be approved in the coming years to address this issue. If economic challenges persist, the debt swap could potentially rise to 15 trillion yuan. The standing committee, led by Chair Zhao Leji, is expected to approve further fiscal support for the slowing economy by the end of this week.

Elsewhere, Elon Musk's $1 million daily voter giveaway has cleared a legal hurdle as a Pennsylvania judge rejected a request from the Philadelphia district attorney to halt the contest, which was labeled an illegal lottery. Judge Angelo Foglietta's ruling, made shortly before the presidential election, came after Musk's attorney argued that winners were not selected randomly but rather based on their suitability as public spokespersons for Musk's pro-Donald Trump America PAC. The contest, which requires participants to be registered voters in swing states and to sign a petition supporting free speech and the right to bear arms, has been ongoing until Election Day. Philadelphia DA Larry Krasner, who filed the lawsuit, characterized the giveaway as a deceptive scheme to gather personal information from citizens in exchange for a chance to win the money. The PAC's treasurer stated that recipients must sign employment agreements and earn the money through their work, suggesting that participation was well-understood. Krasner, denying political motives behind the lawsuit, emphasized his willingness to take action against any high-profile figures engaging in similar practices. The judge is expected to release a detailed opinion later.

On November 4, 2024, U.S. stocks slipped as investors prepared for the presidential election and the Federal Reserve's upcoming rate decision. The Dow Jones Industrial Average dropped 0.6%, while the S&P 500 and Nasdaq Composite both fell 0.3%. Nvidia gained 0.5% after news it would replace Intel in the Dow later this week, while Intel slid 2.9%. Sherwin-Williams shares jumped 4.6% on news of its inclusion in the Dow, replacing Dow Inc. The 10-year Treasury yield decreased to 4.29%, while crude oil prices rose over 2% as OPEC+ extended output cuts. Gold remained around $2,745 per ounce, and Bitcoin traded at $67,800.  All investors will be looking out for the US election, where the first polls are expected to close by 07:00 SGT tomorrow. However, it is possible neither candidate will reach the 270 electoral votes needed to win on election night, due to slow reporting in key states.

DeFi & CeFi

  • Kiln partners with Treehouse as a DOR Panelist
  • UK-based pension scheme allocates 3% into BTC
  • Justin Sun and Andre Cronje challenge Coinbase’s listing fee 
  • Tether CEO rejects any speculations of plans to launch a Tether blockchain 
  • EigenLayer bolsters restaking with Bitcoin yield, P2P.org payouts
  • US regulators mull approving Grayscale crypto index ETF
  • Coinbase and a16z lead $78 million Fairshake fund to shape 2026 midterm elections

Kiln, a prominent player in staking and digital asset rewards management, is set to join Treehouse Protocol as a panelist for the Decentralized Offered Rates (DOR) consensus mechanism. With over $8.6B in staked assets, accounting for 4.55% of all staked Ether, Kiln brings substantial expertise in enterprise-grade staking to enhance the decentralized benchmark rate initiative and foster institutional adoption. As a DOR panelist, Kiln will be instrumental in submitting and validating rate data, thereby establishing a reliable term structure for Ethereum’s staking rewards. Their involvement will improve the accuracy of the Ethereum Staking Rate (ESR), a critical component of the DOR framework. Kiln’s extensive experience in managing large-scale staking assets will bolster the transparency and reliability of the DOR, advancing the goal of creating a decentralized, predictable, and transparent fixed-income market on Ethereum. This partnership signifies a crucial development in the decentralized finance landscape, as Treehouse and Kiln collaborate to build a safer and more dependable DeFi ecosystem for all participants.

Meanwhile, Cartwright, a UK-based pension specialist, reported that an unnamed pension scheme has allocated 3% of its funds into BTC after a thorough due diligence process, citing the asset's long-term growth potential and its potential to lessen dependency on employer contributions. However, details regarding the specific nature of the pension scheme or the total amount invested have not been disclosed. Notably, Legal and General, a major UK pension and investment firm, is also exploring tokenized funds, reflecting a growing interest in integrating digital assets within traditional retirement plans. Globally, entities like South Korea’s pension service and the Michigan State Retirement System are also investing indirectly in crypto, either through holdings in Bitcoin-heavy firms like MicroStrategy or BTC and ETH exchange-traded products. Despite this interest, regulatory clarity remains a work in progress. The UK, under its newly elected Labour government, recently prioritized other financial policies, although the Financial Conduct Authority continues to oversee and regulate crypto activities as needed. This growing shift suggests a cautious but increasing acceptance of crypto as a viable addition to pension fund portfolios, albeit amid evolving regulatory landscapes.

On-Chain

According to CryptoQuant analyst, maartunn, the Open Network (TON) is emerging as more than a playground for speculative assets, evidenced by substantial USDT activity on its platform. Despite the presence of memecoins like DOGS and gaming projects such as Hamster Kombat, TON processed over 3.2 million USDT transactions in the past month, significantly outpacing other tokens. This robust transaction volume underscores TON’s capacity to support real-world financial use cases rather than merely speculative ones. As the second and third most active tokens, Catizen and RabBitcoin show further diversified network usage, suggesting TON’s potential as a versatile blockchain network with legitimate transactional utility. This diversity could strengthen TON's position as a platform with lasting value, distinguishing it from networks primarily known for speculative assets.

In another analysis by CryptoQuant, this time by analyst Yonsei_dent, Bitcoin’s mining difficulty and hashrate have recently reached record levels, reflecting intensified competition within the mining industry. As difficulty rises, miners need more computational power and therefore face higher costs to process transactions. While Bitcoin’s value is increasing, potentially boosting miner revenues, the industry’s reliance on transaction fees to offset escalating costs is a critical factor. If transaction fees fail to adequately support these heightened expenses, miners may struggle to maintain profitability, which could impact the long-term sustainability of Bitcoin’s mining ecosystem. This dynamic highlights the delicate balance between Bitcoin’s value growth and the economic viability of its miners.

Derivatives

  • Funding rate for BTC and ETH remained positive.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH rose to 65.54% and 68.88% respectively.
  • The 30-day 25-delta skew (C-P) for BTC rose to 3.07 while ETH remained in the negatives but rose to -0.87.
  • The futures market witnessed $205.27M in liquidations in the last 24 hours, with longs representing 77.15%.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

12.29%

BNB

OKX

Bybit

11.45%

XRP

OKX

Binance

10.20%

XRP

OKX

Bybit

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.

The 7-day at-the-money IV for Bitcoin has surged to 83.09, signaling that traders anticipate sustained volatility beyond the U.S. election, as this tenor extends past the event. In comparison, the 30-day IV, while also climbing, has only reached 64.56, showing a more tempered outlook over a longer horizon. Notably, the 2-day ATM IV has spiked to 99.93, highlighting intense demand for short-dated options as traders hedge against the near-term volatility surrounding the election. 

BTCs options term structure currently shows steep backwardation, reflecting heightened demand for short-dated options as traders seek cost-effective hedges against potential volatility from the U.S. elections. This surge in demand has driven IV for short-term options to around 100, indicating intense buying activity. 

Bitcoin’s options skew is currently moving in tandem with increasing odds of Trump’s victory, reflecting a bullish sentiment among traders. As Trump’s odds rose to 60% on Polymarket, the 7-day call-put skew for BTC turned positive at 1.02, with the 30-day skew reaching 2.73, suggesting that traders are more bullish on BTC.

Sentiment for ETH, on the other hand, remains cautious with ETH’s 7-day skew dropping to -3.15, while the 30-day skew rose slightly to -0.87. This disparity indicates that traders anticipate BTC to perform more resilient than ETH if the election results defy their expectations, with many hedging by buying ETH puts to guard against potential downside risk.

Lastly, @Paradigm top structures highlighted a mix of instruments for BTC and bearish trades for ETH. Key BTC trades included the purchase of 1500x 15-Nov-24 $64K Puts and 1000x 29-Nov-24 $75K Calls. Notably, there was also a sale of 913x 29-Nov-24 $60K/$80K Bull Risk Reversals. ETH structures saw significant selling activity, with 2500x 6-Nov-24 $2.5K Calls and 1500x 22-Nov-24 $2.45K Calls sold. Additionally, a transaction involved the sale of 1125x 8-Nov-24 $2.4K Straddles, highlighting a preference for premium collection.

Crypto Technical Analysis

The price of BTC over the last few days shows a series of lower highs, suggesting a short-term downtrend as it broke past the immediate support level of $68K and is currently trading around $67.6K near that level. Further bearish momentum would see the price of BTC testing the next support level at $66.1K, representing a potential 2.2% decline from the current price. The primary resistance level to watch is $72K and breaking above this level would be crucial for bulls to regain control. The RSI is at 33.14, approaching the oversold territory, indicating that selling pressure has dominated recently, but it may also suggest that the asset is potentially oversold, which could lead to a short-term relief rally if buying interest emerges.

Similarly, ETH declined past its immediate support level to trade at $2.4K and is set to test the next support level of $2.26K if downside momentum persists. The resistance around $2.76K remains a significant barrier for any potential rally. However, before that, minor resistances near recent highs could also be tested on a bounce. The RSI is at 32.60, which suggests that the asset is potentially oversold, with a possibility of a bounce in the near term if buying interest picks up at this support. However, failure to hold above this support could lead to a deeper correction towards $2.26K.

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TRHX Research (Formerly Treehouse Research) 🌳