BTC

ETH

S&P Futures 500

$39,797.87

$2,322.76

$4,882.00

(-4.40%)

 (-5.62%)

(-0.09%)

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 Premier Li Qiang called for robust measures to help the stock market; Trump proposes 10% tariff (More in Macro & TradFi)
  • FTX reportedly sold $1B worth of GBTC; Ethereum researcher warns that the Dencun upgrade may impact the network’s deflation mechanism (More in DeFi & CeFi)
  • Surge in whale movements for ETH; BTC ETF resulting in heavy inflow (More in On-Chain)
  • BTC term structure stable; short-term volatility contrasts with long-term confidence (More in Crypto Derivatives)
  • BTC breaches the $40K threshold while ETH follows suit (More in Crypto Techincal Analysis)

Macro & TradFi

China's Premier Li Qiang has called for robust measures to stabilize the faltering stock market, in response to the CSI 300 Index plummeting to a five-year low. This downturn, driven by a prolonged housing crisis and deflationary pressures, has persisted despite earlier policy interventions, highlighting the need for more impactful monetary and fiscal strategies. The State Council's recent focus on improving listed companies' quality and market stability signals Beijing's intensified effort to bolster investor confidence. However, experts like Michael Hirson of 22V Research caution that the underlying macroeconomic challenges, such as weak private sector demand, pose a significant hurdle to revitalizing market optimism. This situation shows the criticality of aligning regulatory measures and macro policies to support China's economic recovery. 

Meanwhile, Donald Trump, the Republican nominee for the 2024 presidential race, has proposed a sweeping 10% tariff on all imported goods. According to global strategist Michael Every at Rabobank, this policy aims to fundamentally disrupt the global trade system to foster U.S. reindustrialization in a neo-Hamiltonian style. Treasury Secretary Janet Yellen has warned that this tariff would hike prices for a broad range of goods essential to American businesses and consumers. The proposed tariff has drawn bipartisan criticism, including from the Tax Foundation and the American Action Forum, which predicts a 0.31% reduction in U.S. GDP and a $123.3 billion decrease in U.S. welfare if trading partners retaliate. A tariff would inject significant uncertainty into the global economic landscape, impacting all asset classes and raising geopolitical risks, particularly in the context of U.S.-China relations and the war in Ukraine.

The Dow Jones Industrial Average increased by 0.36%, while the Nasdaq Composite reached its highest level since January 2022, ending at 15,360.29. The S&P 500 similarly rose by 0.36%. In the tech sector, stocks like Palantir, Affirm, and Snowflake witnessed substantial gains, buoyed by this improved market sentiment. However, Archer-Daniels-Midland experienced a significant decline of 23.1% following the suspension of its CFO and a disappointing Q4 earnings report, coupled with a downward revision of its earnings outlook amid an investigation into its accounting practices. The market's focus now shifts to the impending release of US Q4 GDP preliminary data on Thursday at 21:30 SGT and the Personal Consumption Expenditure Price Index data set for Friday at 21:30 SGT, both of which are critical for gauging the economy's health and potential monetary policy shifts.

CeFi & DeFi

  • FTX reportedly sold nearly $1 billion of Grayscale spot bitcoin ETF shares
  • Analyst suggests that Ether supply could be affected by Ethereum's Dencun upgrade
  • Bitcoin Ordinals art 'Genesis Cat' sells for $254K in Sotheby's auction
  • Binance and SEC face off in court
  • Crypto.com reported an increase of crypto owners by 34% to 580 million by the end of 2023
  • AaveDAO Approves Deployment of Aave v3 on Neon EVM Mainnet

FTX's bankruptcy estate reportedly accounted for a significant portion of this exodus by selling 22 million shares, amounting to nearly $1 billion, out of the $2 billion worth of the Grayscale Bitcoin Trust (GBTC) since its conversion into an ETF earlier this month. The conversion of GBTC into an ETF occurred after a decade as a less attractive closed-end fund, accumulating close to $30 billion in assets. Following the SEC's approval of new spot bitcoin ETFs, the data suggests that while these new funds, from entities like BlackRock and Fidelity, have seen inflows, billions have been withdrawn from GBTC, contributing to the selling pressure on Bitcoin's price in the past days.

Meanwhile, the upcoming Dencun upgrade for Ethereum could impact the supply of ether, according to CoinShares Ethereum research associate Luke Nolan. The Dencun upgrade, with the mainnet activation occurring as early as March 2023, introduces a new mechanism called “blobspace”, an alternative to the current transactional “calldata” method, which could lead to reduced gas usage and less ether being burned from gas base fees. The potential reduction in ether burn might affect the growth of ether supply, as gas demand on the Ethereum network drives its deflation mechanism. The Dencun upgrade could see gas prices settle at lower levels, impacting the ether burn mechanism. However, Nolan emphasized that other factors might mitigate the impact, and the overall goal is to solidify Ethereum's market share.

On-Chain

Recent on-chain activity indicates a substantial accumulation of ETH by significant holders. Notably, wallet 0x55C1, has withdrawn 7,779 ETH, valued at approximately $18.7 million, from Binance. Similarly, two wallets, which seem to be operated by the same entity, have collectively withdrawn 8,077 ETH, or about $19.4 million, from Bitfinex. Another wallet, 0x5a11, has also pulled 3,228 ETH from Binance, amounting to roughly $7.8 million. Additionally, six new wallets have been identified withdrawing 7,756 ETH, totaling $18.7 million, from Binance and Kraken. This flurry of withdrawals, totaling 26,841 ETH (equivalent to $64.5 million), signals a strong whale activity that may have significant implications for the Ethereum market dynamics. The significant accumulation of Ethereum by whales could suggest a bullish sentiment among large-scale investors while taking advantage of the recent market declines following the Greyscale selloffs.

In other news, the recent influx of Bitcoin into Fidelity's Bitcoin ETF (FBTC) and Bitwise's Bitcoin ETF (BITB) could be a strong signal of increasing institutional interest. Fidelity's ETF received 5,312 BTC, a substantial sum amounting to $216.3 million, which brings their holdings to a notable 29,907 BTC, or $1.22 billion. Meanwhile, Bitwise's ETF added 1,352 BTC from Flow Traders, worth $55.71 million, resulting in a total holding of 10,152 BTC, valued at $412.71 million. This could potentially lead to a tighter Bitcoin market, possibly driving prices up if the demand continues to outpace the supply.


Crypto Derivatives

  • Funding rates remained positive for BTC and ETH. 
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH rose slightly to 47.98% and 46.60%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC remained at -1.45% while ETH fell to -4.19%.
  • The futures market witnessed $240.88M liquidations, with longs representing 85.10%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

19.27%

DOGE

OKX

dYdX

17.86%

DOGE

Binance

dYdX

17.86%

DOGE

Bybit

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.


Post January 11th approval of the BTC ETF, Bitcoin's ATM IV has notably stabilized, reflecting diminished volatility after a significant initial drop. As of now, the 7-day IV is recorded at 49.45%, while the 30-day IV has maintained a steady level at 45.52% after its value dipped below $40K.

The term structure of BTC has largely preserved its contango shape, mirroring the pattern observed on the previous day. Notably, there's a marked rise in IV for contracts expiring in three days. This increase in short-term IV, set against the backdrop of stable IV for longer-dated contracts, indicates investors are bracing for immediate market volatility from GBTC sellings while maintaining confidence in BTC's long-term stability. This sentiment may also be influenced by the anticipation of the upcoming release of the US Q4 GDP preliminary data and the Personal Consumption Expenditures Price Index data.

The 25-delta call-put skews for BTC options indicate a stabilizing trend in the short term, with the 7-day skew holding at -1.45. Conversely, the 30-day skew has declined to -4.36, signaling a more pronounced bearish sentiment for the medium term. This data suggests that BTC option traders are exercising caution, reflecting uncertainty and a conservative stance toward future price movements. 

Lastly, @Paradigm highlighted that option flows for last Friday during Asia/Europe Hours emphasized downside coverage with strategic put purchases and structured positions. Key BTC trades encompassed the procurement of 200x 29-Mar-24 35K Puts bought, a strategic 100x 26-Jan-24 40.5K/44K Straddle bought, coupled with the sale of 100x 26-Jan-24 44K Calls. Concurrently, significant ETH structures involved the sale of 2500x 28-Jun-24 2.8K Calls and 1000x 23-Feb-24 2.4K Straddles, followed by the sale of 1000x 23-Feb-24 2.1K Puts.

Crypto Technical Analysis

Onto technical analysis, BTC has broken below the previously identified trendline and the crucial $40K psychological support level, following further selling from Greyscale. Presently, the BTC price hovers around $39.9K and continues to trend downward. The RSI has also declined further into the oversold territory, currently at around 27, indicating a potential short-term price reversal soon. Moving forward, BTC is likely to undergo another downturn before Greyscale concludes its selling actions, with the next immediate support level at approximately $38K. However, there is a possibility of a short-term reversal, and $40K remains a key resistance level for investors to monitor closely.

Following BTC's movements, ETH also experienced a sharp decline in its price last night, accompanied by the RSI breaching the oversold threshold. Currently trading at around $2.33K, ETH hovers around the border of the ascending widening wedge observed on the 4-hour chart, a pattern resulting from increased volatilities in recent days. If this level fails to hold, the immediate support is at approximately $2.2K, represented by the local lows since late December. However, a short-term reversal remains possible, which could see a bounce back from the current level and an approach toward the resistance at around $2.38K.

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