BTC

ETH

S&P Futures 500

$26,745.00

$1,695.75

$4,385.25

(-6.36%)

 (-5.57%)

(-0.66%)

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


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Our Daily View

What We Are Covering Today

  • Chinese authorities push state-owned banks to stabilize yuan amid volatility; Evergrande files for US creditor protection. (more in Macro & TradFi)
  • Crypto traders suffer $1B in liquidations from BTC, ETH selloff with prices rallying back after SEC’s positive sentiment toward Ether-Futures ETFs (more in DeFi & CeFi)
  • Prominent Bitcoin whales remain resilient despite profit margins shrinking (more in On-Chain)
  • Backwardation in BTC and ETH markets amid significant Bitcoin futures liquidations (more in Crypto Derivatives)
  • Both BTC and ETH experienced a large selloff, breaking all previously identified support levels. (more in Crypto Technical Analysis)

Macro & TradFi

Amid concerns over yuan volatility, Chinese state-owned banks are being directed to increase their involvement in the currency market to curb excessive fluctuations. This directive coincides with the yuan approaching the critical level of 7.35 per dollar, closely monitored by China’s top leadership. Officials are also considering reducing foreign-exchange reserve requirements to prevent rapid depreciation. Despite recent measures, a somber market sentiment persists, raising concerns about capital outflows. The People's Bank of China remains steadfast in preventing extreme yuan adjustments, being prepared to intervene if necessary. The offshore yuan has slightly strengthened, and the central bank has an array of tools at its disposal to counter depreciation, with the delicate balance between export support and capital retention continuing to be crucial.

In other news, China Evergrande, the world's most indebted property developer, has filed for creditor protection under Chapter 15 of the U.S. bankruptcy code, seeking to shield itself and its affiliate Tianji Holdings from legal actions by creditors. This move follows the company's $330 billion liabilities and its struggle to handle a debt crisis since late 2021, causing a series of defaults across the Chinese real estate sector. Concerns are mounting that the property sector's problems could have wider economic repercussions as growth slows in China. Country Garden, another major developer, has also raised investor concerns due to missed interest payments. Evergrande's bankruptcy filing aims to secure recognition of ongoing restructuring discussions in various jurisdictions, potentially leading to a debt restructuring plan's approval by September.

Lastly, US equities extended their losses for a third session as investors evaluated earnings and economic data amid rising interest rates. DJIA closed down 0.84%, slipping below the 50-day moving average for the first time since June 1. The S&P 500 fell 0.77%, and the Nasdaq Composite dropped 1.17%. The 10-year U.S. Treasury yield hit its highest point since October 2022 due to concerns about inflation risks after the Federal Reserve's July meeting minutes. Walmart's positive earnings and raised guidance failed to prevent a 2% decline, while Cisco Systems gained over 3% on better-than-expected quarterly earnings.

DeFi & CeFi

  • Crypto traders suffer $1B in liquidations from BTC, ETH selloff
  • Crypto prices rally back as SEC said to be ready to greenlight Ether-Futures ETFs
  • Layer2 network Linea deploys ERC-20 token bridge
  • FTX-linked Farmington State Bank slapped with Fed enforcement action
  • Coinbase suspends USDT, DAI and RAI trading for Canadian users

Cryptocurrency traders faced considerable losses of around $1 billion from liquidations within the last 24 hours. Bitcoin's price rapidly dropped by 7% to about $26,900, hitting a low near $25,000, the lowest since June. CoinGlass data shows approximately $821 million in long positions were wiped out, with Bitcoin and Ethereum seeing the largest losses at $472 million and $302 million respectively. This marked the highest volume of Bitcoin liquidations in a day since June 2022. The sell-off was driven by market uncertainties, including concerns about China's economy, weakening foreign currencies, and rising bond yields. Bitcoin and Ethereum experienced significant losses, reaching their lowest points since early summer.

Meanwhile, SpaceX, the aerospace technology company led by Elon Musk, also reportedly devalued its Bitcoin holdings by $373 million in both 2021 and 2022 and may have sold off its entire cryptocurrency stash. While it's uncertain if the full $373 million was sold, documents suggest a sale took place. This move follows Musk's earlier announcement of SpaceX's Bitcoin acquisition. Notably, Tesla, another company Musk is associated with, previously sold a significant portion of its own Bitcoin holdings.

However, markets slightly rebounded back as reports emerged about the U.S. Securities and Exchange Commission's potential approval of Ether-Futures exchange-traded funds (ETFs). Ether surged from $1,640 to $1,710 in minutes following a Bloomberg report, partially reversing the prior decline. Bitcoin also rallied, rising from $26,400 to $27,200. The SEC's favorable stance on Ether-Futures ETFs, akin to Bitcoin-Futures ETFs, reflects a shifting market sentiment. Despite the SEC's ambiguity about ether's security classification, its regulatory influence remains pronounced, shaping the trajectory of anticipated spot Bitcoin or Ether ETF approvals.

On-Chain

Following one of 2023's most pronounced declines in the cryptocurrency markets, data indicates heightened activity among high-net-worth Bitcoin transactions exceeding $1M. Notably, despite this market turbulence, the number of substantial Bitcoin wallets remains steady, suggesting that prominent investors maintain their positions, emphasizing the potential resilience and confidence in the market's longer-term outlook.

The percentage of Bitcoin supply in profit recently decreased from 71% to 61%, which highlighted an increasingly price-sensitive, top-heavy market. This shift underscores the growing susceptibility of the market to price fluctuations and the importance of investor sentiment in shaping near-term price dynamics.

Crypto Derivatives

  • BTC and ETH funding rates remain positive.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remain largely unchanged at 46.33% and 43.61%, respectively.
  • 30-day 25-delta skew (C-P) for BTC decreased to 0.34% while that of ETH dipped to -2.43%.
  • The futures market witnessed $1.02B worth of liquidations in the last 24 hours with longs representing 80.63% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

16.81%

DOGE

OKX

Bybit

15.93%

LTC

Binance

dYdX

12.55%

SOL

Binance

Bybit

Source: @CexyArbBot Telegram Bot

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's ATM IV surged 39.5% yesterday, possibly driven by China Evergrande's Chapter 15 bankruptcy filing in New York. Concurrently, Ethereum's ATM IV witnessed a staggering rise of 70.49%, moving from 25.59% to 43.63%, potentially attributed to growing speculation that the SEC is poised to approve Ether-Futures ETFs.

The term structures for both BTC and ETH have transitioned noticeably into backwardation, driven by a widespread increase in IV across all tenors. While the structures have flattened, a pronounced divergence between BTC and ETH's term structures has emerged, with BTC's IV significantly surpassing that of ETH. This divergence underscores the market's heightened sensitivity to macroeconomic factors and suggests traders are differentiating risk between the two major cryptocurrencies in light of recent events.

BTC and ETH's 7-day and 30-day (C-P) skews have notably taken different paths. Specifically, BTC's 7-day skew rose from -1.33 to 0.58, indicating a preference for call options. On the other hand, ETH's 7-day skew took a nosedive from -2.22 to -6.80, indicating a stronger preference for put options. This divergence suggests contrasting market sentiments between the two leading cryptocurrencies, highlighting the potential for varied hedging or speculative strategies by traders in these assets.

In the Bitcoin futures market, there has recently been a significant deleveraging event, with contracts equivalent to over 68K BTC closing. This activity resulted in the liquidation of Bitcoin long positions worth over $220M. This rapid shift suggests heightened market uncertainty amid such volatility spikes.

In today's trading session as observed by @Paradigm for Bitcoin, the primary trading structures highlighted a mix of bullish and bearish sentiments. First, there was a notable acquisition of 900x 29-Sep-23 $30K Call options. This was followed by the purchase of 550x 27-Oct-23 $26K / 29-Dec-23 $25K Put Calendars, indicating a hedging strategy spanning different expiry dates. Lastly, 500x 25-Aug-23 $26K Puts with a delta (dx) were bought, hinting at an expected downward price movement and the trader's intent to capitalize on it. These transactions showcase the diverse strategies employed by traders in the current BTC market.

Crypto Technical Analysis

Moving on to technical analysis, BTC underwent a substantial selloff in the last trading session, breaching past support levels and essentially erasing the majority of gains since June. Consequently, the Relative Strength Index (RSI) has plunged into the highly oversold territory at 21.7. Looking ahead, the next support is situated around the $25K mark, which serves both as a recent local low and a robust psychological support level. Conversely, if the price retraces from its current position, the $28.3K zone has now transformed into a resistance area, evident from its roles in both April and May.

ETH has displayed a comparable pattern, breaking through previous support levels. The RSI has similarly descended to 22.76. Notably, ETH seems to have discovered support in the $1.67K-$1.7K range, which signifies the lows observed since April and the resistance encountered from January to March. In the event that this level fails to hold, there is a likelihood of the price descending to the $1.5K level, presenting an additional 10% downside, before potentially extending further down to $1.44K.

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