BTC

ETH

S&P Futures 500

$43,097.49

$2,590.83

$4,796.50

(+1.20%)

 (+3.32%)

(-0.07%)

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

  • China’s economic growth surpassed goal; UK highlights risks to global supply chain (More in Macro & TradFi)
  • Socket protocol breached, losing $3.3M; GBTC transfers $376M in Bitcoin to Coinbase (More in DeFi & CeFi)
  • Santiment reports major Bitcoin transactions; GBTC continues to dominate with its BTC holdings despite substantial outflows (More in On-Chain)
  • BTC term structure returns to contango; Option flows concentrate on bullish structures despite market dips (More in Crypto Derivatives)
  • BTC approaches upper Bollinger Band; ETH continues to move in an upward trend (More in Crypto Technical Analysis)

Macro & TradFi

Chinese Premier Li Qiang announced at the World Economic Forum in Davos that China's economy grew by around 5.2% in 2023, surpassing the government's official growth target for the year. Li emphasized that China achieved this growth without resorting to "massive stimulus" and highlighted efforts to inspire confidence in the economy and government. He also addressed short-term challenges in the property sector and local government debt, as well as longer-term issues like demographic changes and a "loss of confidence." Li's unexpected early announcement of the GDP figures was seen as unusual by economists, signaling a shift in China's data release practices. His announcement holds significance as it reflects China's strategic emphasis on portraying economic stability and strength, while navigating its internal challenges such as the property market slowdown and deflationary pressures.

Meanwhile, Government officials in the UK have cautioned business executives about the limitations of the government's ability to secure vital international supply chains, especially in light of the recent attacks on ships traversing the essential Suez Canal route. Nusrat Ghani, the UK's business minister, emphasized on Wednesday that the primary responsibility of managing supply chains rests with businesses, with government intervention being a contingency for scenarios like market failures. The strategy is designed to help industries maintain access to essential products such as medicines, minerals, and semiconductors, particularly in the face of an increasingly volatile geopolitical climate. Its key initiatives include the establishment of a Critical Imports Council which aims to collaborate with businesses to enhance the analysis of potential global supply chain disruptions. The government also plans to develop a new program to identify, review, and where possible, eliminate barriers to imports. Additionally, it aims to support companies in finding new suppliers in third-world countries. 

Lastly, during yesterday’s trading session, the Dow Jones Industrial Average declined by 0.62%, closing at 37,361.12. The Nasdaq Composite declined by 0.19%, reaching 14,944.35. The S&P 500 dropped 0.37%, closing at 4,765.98. The key factor that contributed to the decline across stock markets could be due to a statement by Federal Reserve governor, Christopher Waller, as he mentioned that the central bank will likely cut rates this year, but the shift in monetary policy doesn’t have to be “rushed”. This, in turn, saw stocks moving lower and bond yields moving higher. Specifically, shares of Boeing Co. BA slipped 7.89% to $200.52 on Tuesday and Spirit Airlines dropped 47.1% to $7.92 as they got blocked in its takeover by JetBlue Airways. Meanwhile, AMD also rose by 8.3% after KeyBanc raised its price target, citing strong demand for its artificial intelligence chips. 

CeFi & DeFi

  • Socket protocol loses $3.3M in confirmed approval exploit
  • Solana Mobile to Sell Second Crypto Smartphone
  • Cantor Fitzgerald CEO Howard Lutnick vouched for stablecoin issuer Tether's legitimacy
  • Metis Launches Community Testing of Proof-of-Stake Sequencer Pool
  • Grayscale Bitcoin Trust ETF transfers another $376M in BTC as price stabilizes
  • Crypto firm Ripple explored IPO outside of U.S
  • Hong Kong’s HashKey secures $100 million in Series A round at $1.2 billion valuation

The cross-chain protocol, Socket, recently suffered a security breach, leading to the loss of $3.3 million from its contracts. This exploit occurred due to attackers targeting users who had granted infinite approvals to Socket contracts. In response, Socket has temporarily halted all related contracts to mitigate further financial damage. This incident underscores the vulnerabilities inherent in blockchain protocols and the importance of stringent security measures, particularly in protocols extensively utilized in the Web3 space, like Socket. The breach also highlights the need for users to be vigilant about their approvals and interactions with such protocols. Additionally, the situation has been exploited by phishing scammers, further complicating the aftermath of the breach.

Elsewhere, Grayscale Bitcoin Trust (GBTC), recently transferred another 8,730 BTC, valued at over $376 million, to Coinbase Prime. This move, recorded on Jan. 16, aligns with the stabilization of Bitcoin's price following earlier declines. Analysts suggest that these transfers, which are a consequence of GBTC's transformation into an exchange-traded fund (ETF) on Jan. 11, could be due to the need to liquidate Bitcoin to meet redemption demands. This change in GBTC's structure allows authorized participants to redeem shares for Bitcoin or cash equivalents, necessitating asset liquidation when the fund's share price falls below Bitcoin's value. Such activities may influence Bitcoin's market price, as observed in recent price trends. The scenario also reflects broader market dynamics, highlighting the impact of institutional actions on cryptocurrency prices and investor sentiment.

On-Chain

Moving on to On-Chain, Santiment reported a significant transaction in the Bitcoin market, marking the largest transaction of 2024 so far. Around midnight, a transaction worth $665.3 million, involving 42,870 BTC, was executed between 3pm and 4pm UTC. This transaction contributed to the highest level of hourly Bitcoin movement witnessed in nearly half a year. Such a substantial transaction highlights ongoing activity and the potential influence of large-scale investors or 'whales' in the cryptocurrency market. This event not only reflects the scale of capital flow within the Bitcoin ecosystem but also could have implications for market liquidity and price dynamics, given its magnitude and the timing within the trading day.

Meanwhile, an analysis by bitcointreasuries.net vividly illustrates that the Grayscale Bitcoin Trust (GBTC) holds a dominant position in the market, with its substantial holdings of 617,080 BTC significantly overshadowing other Exchange Traded Fund (ETF) products. Despite recent outflows, GBTC's extensive Bitcoin reserves continue to make it an appealing option for traders and investors prioritizing liquidity and market depth. Grayscale's substantial holdings in Bitcoin can largely be attributed to its longstanding position as a Bitcoin trust, a status that has enabled it to accumulate an impressive amount of BTC over the years.


Crypto Derivatives

  • Funding rates remained positive for BTC and ETH. 
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH dropped slightly to 54.88% and 60.98%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH rose to -0.98% and -0.05%, respectively.
  • The futures market witnessed $99.39M liquidations, with shorts representing 57.92%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

58.39%

BNB

OKX

Bybit

20.39%

SOL

Binance

dYdX

19.10%

ETH

OKX

dYdX

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.


BTC’s ATM IV has steadily decreased throughout yesterday, with the 7-day IV dropping from 53.77 to 51.31, now below the 30-day IV, currently at 52.03. This indicates that the prevailing market sentiment suggests a reduction in short-term volatility for BTC, with expectations of relatively smaller price swings in the near future.

The term structure for BTC has reverted to a contango state for the first time in over a week. This shift is attributed to the decline in implied volatilities (IVs) across various tenors of the curve. This development aligns with the earlier observations, signaling a return to normalcy in the market after the resolution of expectations surrounding the BTC ETF approval, as participants seek the next narrative.

The BTC 25-delta call-put skews have shown a continued rise in the last 24 hours. The 7-day skew increased from -4.68% to -4.19%, while the 30-day skew also rose, reaching -0.98% and nearing the neutral territory. This trend indicates an improving market sentiment towards BTC, possibly influenced by increasing flows into ETF products and the growing interest in cryptocurrencies as a mainstream investable asset class.

During yesterday’s Americas Trading Session, the options market continued to be relatively uneventful, as reported by @Paradigm. Despite the market dips observed in the last few days, bullish option flows continued to dominate. Notable transactions included the purchase of 400x 19-Jan-24 43K / 2-Feb-24 45K Call Calendar, 8250x 23-Feb-24 2.7K/3.2K Call Spread, and the selling of 3375x 19-Jan-24 2.55K Strangle.

Crypto Technical Analysis

Moving to Technical Analysis,  the 4-hour chart shows BTC continuing to rise conservatively back towards the support of the ascending channel. The current price stands at $42.8k at the point of writing. The next resistance is around $46K, amounting to an approximate 3.58% increase from the current levels. Conversely, should the price fail to sustain upward momentum, there is a notable support level at $42.1K, a 2.20% drop from where it stands. It can also be observed that BTC’s price is approaching the upper Bollinger Band and a potential breakout could be on the charts. The current narrowing of the bands compared to the previous wider stance suggests that the market volatility is decreasing after a period of more pronounced price movement, which could suggest the market is consolidating before its next significant move. RSI continues to rise from yesterday’s 42.67 to 47.59 today, which suggests the potential of a reversal as selling pressure eases.

As for ETH, it is currently trading at around $2.58K, building on yesterday’s increase and continued upward movement off the support of $2.47K. The market is witnessing a tug-of-war at this level, with the immediate support firmly established at $2.39K, approximately a 7.4% decrease from the current price. Should this support give way, the subsequent significant support lies at $2.1K, marking an additional 2.7% potential decline. On the upside, immediate resistance is observed at $2.7K, which if reached, would represent a 4.5% increase from the present level. The price continues to surpass the 50, 100, and 200 MA and these MAs currently form a dynamic support for ETH, with the 50MA at 2.5K. The RSI is currently at 59.86, which suggests that there is more buying pressure than selling pressure, although it has yet to pass the overbought territory.

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