BTC

ETH

S&P Futures 500

$30,014.42

$1,894.14

$4,588.00

(-0.08%)

 (-0.85%)

(+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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June 2023 Market Recap

Our Daily View

What We Are Covering Today

  • China threatens retaliation to U.S. investment curbs; UK inflation falls unexpectedly to 7.9% in June (more in Macro & TradFi)
  • Nasdaq halts plan for crypto custody service; SEC to review Bitcoin ETF applications as deadline comes into sight (more in DeFi & CeFi)
  • Bear market recovery pace similar to historical cycles; Crypto Twitter reacts to 61K ETH inflow on Kraken (more in On-Chain)
  • Dwindling BTC and ETH IV amidst a quiet market; BTC shows safe haven bid with rising call skew (more in Crypto Derivatives)
  • BTC continues to trade below support channel while ETH tests support for the 8th time (more in Crypto Technical Analysis)

Macro & TradFi

China's Ambassador to the United States, Xie Feng, has warned that Beijing will respond to US national security measures to limit Chinese investments and access to advanced technologies. During the Aspen Security Forum, Xie stated, "China will not provoke, but neither will it shrink from provocations," which suggests retaliation to actions such as the US investment screening mechanism targeting Chinese entities in sectors like semiconductors, quantum computing, and artificial intelligence. Xie's words come as a response to the US Commerce Department preparing to tighten export controls further to obstruct firms like Nvidia from selling AI-related semiconductors to China. Beijing's countermeasures could include licensing requirements for exporting crucial minerals for chip production and further restrictions on American tech companies operating in China.

Elsewhere, UK inflation declined to a 15-month low at 7.9% in June, surpassing expectations and reducing the likelihood of an aggressive interest rate increase from the Bank of England. The larger-than-anticipated dip in inflation caused the pound to weaken and property shares to rally. Lower inflation rates, driven by decreased motor fuel costs, have eased some market concerns, resulting in investors expecting a quarter-point rise in interest rates rather than a half-point at the upcoming August Bank of England meeting. Inflation remains well above the bank's 2% target despite the drop, indicating that further interest rate hikes remain likely.

During Tuesday's trading session, the S&P 500 rose by 0.24%, the Dow Jones Industrial Average rose 0.31%, and the Nasdaq Composite increased by 0.03%. US Housing Starts retreated -8% MoM in June after surging in the prior month. US Building Permits, a proxy for future construction, also slipped -3.7% MoM. Wheat prices soared as much as 9%, its most significant surge since 2012, due to Russia's warning that all ships headed to Ukrainian ports are potential threats carrying military cargo. This provocation from Russia comes just days after they ended the Black Sea grain deal.

DeFi & CeFi

  • Nasdaq halts plan for crypto custody service due to U.S. regulatory conditions
  • U.S. SEC to commence review of spot bitcoin ETF application, initial decision deadline set at 45 days
  • Pendle launches fixed-rate product Pendle Earn
  • Synthetix targets the launch of Perps V3 and Infinex in Q4.
  • Linea reveals Linea Voyage NFT collection, starts airdrop for eligible participants
  • Binance temporarily pauses some market order functions for all spot and margin trading pairs
  • Starknet introduces Starknet Appchain

Nasdaq has halted its plans to launch a crypto custody service due to shifting business and regulatory conditions in the U.S. After their prediction that the service will go live in Q2 2023. In September 2022, Nasdaq reported that it had been working on the infrastructure and regulatory approval for the custody service, applying for a limited-purpose trust company overseen by the New York Department of Financial Services. Despite this setback, Nasdaq will continue supporting the digital asset industry through partnerships with potential ETF issuers and providing technology for crypto custody. Individuals in the crypto space widely regard this move as a blow to the institutional adoption of crypto in the U.S., with concerns that regulatory hurdles may prompt firms to seek more favorable jurisdictions for their operations.

The U.S. Securities and Exchange Commission (SEC) has received six applications, including BlackRock's iShares Bitcoin Trust, for spot bitcoin exchange-traded funds (ETFs). The clock has started ticking on the 45-day review process after the SEC filed the applications in the Federal Register, with the possibility of an extension of up to 240 days. While there are no approval guarantees, BlackRock's filing has sparked speculation about the likelihood of permission.

On-Chain

Bitcoin often sees substantial capital outflows in bear markets as investors realize their losses. The realized cap drawdown by @glassnode is a measure of such losses, and it reached the second-deepest value at -18.8% in 2022, reflecting the severity of the bear market. Historical data indicates that it typically takes between 95 and 239 days for the realized cap to recover to its all-time high in previous cycles. The current recovery is progressing at a similar pace.

On the other hand, Twitter was abuzz yesterday due to a significant inflow of ETH sent to exchanges by an ICO participant. An anonymous individual transferred the initial coin offering (ICO) of 61K ETH in 2015 to a wallet linked to the crypto exchange Kraken. However, the CEO of Cryptoquant, @ki_young_ju, provided perspective, stating that this 61K ETH inflow is relatively insignificant compared to the historical ETH deposits typically seen on exchanges.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH
  • Deribit Implied Volatility Index (DVOL) fell to 40.61% and 41.59% for BTC and ETH respectively
  • 30-day 25-delta skew (C-P) for BTC and ETH is at 2.04% and 0.15% respectively
  • The futures market witnessed $57M worth of liquidations on Wednesday with shorts representing 56% of the total

Top 3 CEX USDT perp funding rate arbitrage based on the last 24-hour lookback:

Net Annualized APR

Perp (USDT pair)

Long on

Short On

14.79%

SOL

OKX

dYdX

13.53%

XRP

OKX

Binance

10.79%

ETH

dYdX

Bybit

Source: @CexyArbBot Telegram

1) Pairs observed include BTC, ETH, SOL, BNB, XRP, LTC, DOGE vs USDT perps 

2) CEX observed include Binance, Bybit, OKX & DYDX

@CexyArbBot allows you to customize CEX, 100+ pairs & lookback periods combo

IVs for BTC and ETH declined as price action remained subdued. The 30-day ATM IV on ETH is now comparable to BTC. Both cryptocurrencies' IVs are currently at their lowest since the beginning of the year, below 40%. Without significant catalysts or events, the 30-day IVs will likely continue trading at these lower levels.

Meanwhile, the term structure for both BTC and ETH remains in contango, showing minimal changes across the IV curve.

Skews (C-P) have remained relatively stable, with BTC call skews showing a slight uptick compared to the previous trading session. The skews indicate a higher demand for BTC call options relative to ETH. Despite ongoing bearish events, such as the Celsius altcoins liquidation, which usually impacts the broader altcoin market, including ETH, investors still prefer BTC as the safe haven bid.

According to Laevitas, there have been notable bullish activities in BTC flows over the past 24 hours. Notably, there were purchases of 180x 29-Mar-24 $32K/$45K bull call spreads and 300x 29-Sep-23 $28K/$34K long risk reversals. Conversely, during yesterday's trading session, there was a significant sell-off of near-dated bear call spreads on ETH. The specific trade involved selling 5,000x 25-Aug-23 $1.9K/$2.2K bear call spreads.

Crypto Technical Analysis

BTC remains uncertain as it hovers around the lower bound of the rising channel after yesterday's pullback from the lower Bollinger Band and 200-day SMA. A potential failure of this support leaves BTC with limited clear support, except for the trendline formed by the higher lows on the daily timeframe, which suggests a possible downside of around 10% with a range of $27.2K - $27.6K.

ETH's price witnessed a minor drop, testing the channel's lower boundary for the 8th time on the 4-hour chart. The rising 200-day SMA approaching this level has strengthened it as a critical support zone. A potential bounce back from this level would be significant, with the following crucial zone to monitor being the potential crossover of the 50-day and 100-day SMA at around $1.92K, indicating an apparent bullish upward movement. Conversely, failure to hold this level may result in a more than 5% decline, targeting the support zone last seen in late June, ranging from $1.77K to $1.8K.

Access institutional-grade commentary on TradFi × Crypto markets

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Treehouse Research 🌳