🌳 Chinese Government Pledges Efforts to Revive the Market; MSTR to Join NASDAQ 100

GM 🌳

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Our Daily View

What We Are Covering Today

• China regulators pledge efforts to recover the property market; Korea’s acting president reassures allies following Yoon Suk Yeol’s impeachment (More in Macro & TradFi)
• MicroStrategy joins Nasdaq-100; MegaLabs raises $10M (More in DeFi & CeFi)
• Solana’s 6-12-month-old wallets hold 27% of supply; Trump’s World Liberty continues accumulation of crypto spanning mature and emerging projects (More in On-Chain)
• BTC’s 7-day IV increases sharply to diverge from 30-day IV; BTC’s short-term and mid-term skews reflect declining trend in market sentiment (More in Crypto Derivatives)
• BTC shows bearish reversal signals; ETH indicates bullish continuation with key levels in focus (More in Crypto Technical Analysis)

Macro & TradFi

China's regulators have pledged to strengthen efforts to stabilize the property and stock markets, as well as implement more effective fiscal policies following a two-day meeting of top leaders. The government will introduce measures to stimulate the recovery of the property market, including increasing demand and controlling land supply. The China Securities Regulatory Commission plans to enhance monitoring and supervision of futures and spot trading, along with margin trading and derivatives. Additionally, the Ministry of Finance will increase the issuance and use of local government special bonds and expand their investment areas. These efforts align with the government's broader stimulus agenda, as they aim to raise the fiscal deficit target and prioritize boosting consumption and domestic demand. Despite some recent improvements, the economy remains fragile, with challenges in policy effectiveness and deflationary pressures.

In other news, South Korea's acting president, Han Duck-soo, moved to reassure international allies and calm domestic markets following the impeachment of President Yoon Suk Yeol over a martial law attempt. Han spoke with U.S. President Joe Biden, assuring that South Korea would continue its foreign and security policies without disruption, particularly its alliance with the U.S. The acting president also confirmed that his office would not face impeachment, as the opposition party decided to avoid further political instability. Yoon and other senior officials face potential charges for their roles in the martial law decision. Han has taken measures to maintain military readiness against North Korea, which had raised concerns about potential provocations. As South Korea faces political uncertainty, global partners are looking for stable leadership. Economic fallout from the situation has led to calls for measures to address domestic demand issues and support for small businesses.

Last Friday, U.S. stocks ended with a mixed performance as a recent rally slowed ahead of the Federal Reserve meeting. The S&P 500 dipped slightly and the Dow fell 0.2%, snapping the S&P’s three-week winning streak, while the Nasdaq edged up 0.1%. Early gains, driven by Broadcom’s (AVGO) strong earnings and AI-fueled growth projections lifting chip stocks, faded by the close. Broadcom surged 24% to join the trillion-dollar market cap club, while Marvell Technology, Arm Holdings, and Micron Technology also rose. Nvidia declined 2.3% and other major tech names mostly fell, though Tesla and Apple hit record highs. Treasury yields climbed, and Bitcoin rose back above $101,000. Among notable movers, Nucor slid 4.7%, Super Micro Computer fell 3.9% on potential delisting worries, while Lamb Weston, Walgreens Boots Alliance, and Arista Networks posted significant gains.

DeFi & CeFi

• MicroStrategy to join Nasdaq 100, QQQ ETF following 500% rally this year
• MegaETH developer raises $10 million in 3 minutes on Cobie's Echo
• Fantasy.top announces V2 and $4.25 million seed funding from Dragonfly and Manifold Ventures
• Chainalysis expands Solana coverage to include Pump.fun memecoins
• Justin Sun-connected BiT Global sues Coinbase for delisting wBTC and launching competitor
• OpenSea Cayman Islands registration fuels token airdrop rumors

MicroStrategy (MSTR) will join the Nasdaq-100 index on December 23, driven by a nearly 500% year-to-date stock rally, reflecting its position as a Bitcoin-focused corporate entity. The company, alongside Palantir and Axon Enterprise, will replace Moderna, Illumina, and Super Micro Computer in the index as part of its annual rebalancing. This move is expected to trigger over $2 billion in purchases from major ETFs, including the QQQ ETF, according to Bloomberg analyst James Seyffart. Despite its current $98 billion market cap, MicroStrategy’s Bitcoin holdings, valued at $43 billion, underscore its pivot from software to cryptocurrency under Michael Saylor’s leadership. While Nasdaq-100 inclusion solidifies its status, Bernstein analysts suggest the next goal—joining the S&P 500 by 2025—faces challenges due to the underperformance of its core software business.

In other news, MegaLabs, the developer behind the real-time Ethereum-compatible blockchain MegaETH, raised $10 million in under three minutes via Cobie’s Echo platform, setting a new record for Echo's largest funding round since its April beta launch. Initially targeting $4.2 million, MegaLabs exceeded its goal within 56 seconds, ultimately increasing the raise to $10 million due to overwhelming demand from 3,200 investors across 94 countries. Conducted at a nine-figure valuation, matching its $20 million seed round in June, the raise reflects MegaLabs' commitment to decentralization and community ownership, mirroring Ethereum’s ethos. The funds will fuel MegaETH's ecosystem development ahead of its public testnet and mainnet launches.

On-Chain

An on-chain analysis of Solana by Glassnode showed that long-term holders maintain strong convictions, with a growing share of wealth locked in the network. The 6-12 month cohort now holds 27% of the supply, signaling confidence from buyers during the 2024 rally. In contrast, the 1-2 year cohort—comprised of investors from the previous bull run—has significantly declined, dropping from 48% in June to below 5% currently, as many took profits during this year’s price surge. This shift suggests that selling pressure from earlier investors has largely subsided, and the growing dominance of long-term holders indicates an expectation of a stronger holding sentiment.

An on-chain analysis by Lookonchain found that Trump's World Liberty has been actively deploying capital, spending significant amounts of USDC to accumulate a diverse range of crypto assets since November 30. The purchases include 8,105 ETH for $30M at $3,701, 103 cbBTC for $10M at $97,181, 78,387 LINK for $2M at $25.50, 6,137 AAVE for $2M at $326, 509,955 ENA for $500K at $0.98, and most recently, 134,216 ONDO for $250K at $1.86. This strategic accumulation reflects strong bullish sentiment, with investments spanning established assets like ETH, LINK, and AAVE, as well as emerging tokens such as ENA and ONDO, with the possibility of using these funds as part of the protocol’s treasury.

Derivatives

• The funding rate for BTC and ETH remained positive.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH increased slightly to 61.26 and 73.5, respectively.
• The 30-day 25-delta skew (C-P) for BTC remained flat at 1.94, while that of ETH rose to 0.25, respectively.
• The futures market witnessed $547M in liquidations over the weekend, with longs representing 52.11%.

Bitcoin's at-the-money constant maturity IV for 7-day options increased over the weekend to 61.3, signaling heightened short-term uncertainty. The 30-day IV remained relatively stable at current levels of 58.54 throughout the observed period, hovering within a tight range. The divergence between the 7-day and 30-day IV suggests that traders are pricing in immediate risks, with an increased demand for short-dated options as hedging, and a calmer outlook beyond the immediate horizon.

Bitcoin's term structure is in backwardation, where short-term volatility is elevated relative to long-term expectations. Highlighting a clear focus on short-term risks while showing muted expectations for prolonged volatility spike.

BTC's 7-day and 30-day option skews are both on a declining trend at 1.29 and 1.94, respectively. The 7-day skew showed intermittent upward spikes earlier in December, before moving to lower levels toward the middle of December, suggesting a shift in sentiment away from immediate bullishness. 30-day skews reflect a steady decline, as market sentiment over the medium term turns slightly more bearish. Given the strong movement to the upside by BTC, traders may be hedging out delta risk with puts. 

Lastly, @Paradigm highlighted a session with a mix of bullish and bearish structures. Key BTC trades included the purchase of 2226x 28-Mar-25 $150k Call, 1325x 27-Dec-24 $110K/3-Jan-25 $110K Call Calendar, and 1150x 28-Mar-25 $70k Puts. Meanwhile, ETH flows featured the sale of 6500x 28-Mar-25 $5k Call and 5000x 27-Dec-24 $4.3K Call, and a 5400x 28-Mar-25 $7.5K/$10K Call Spread bought.

Crypto Technical Analysis

BTC on the 4-hour chart is trading at $105.4K, and an ascending wedge pattern is forming, indicating a possible bearish reversal signal if the pattern breaks down. The latest price action shows a wick touching the top of the upper trendline, suggesting a rejection near this resistance level. Should BTC fail to sustain momentum and breach this level, immediate support lies near $93.3K, with stronger support at $87.2K, representing a potential decline of approximately 12% from current levels. Conversely, a breakout above the wedge could signal further upside toward 108K, where the next key resistance lies. The RSI is at 75.9, signaling overbought conditions, and an upward trend in RSI suggests buying momentum remains strong but could face exhaustion.

ETH is trading at the $4K level, with an ascending triangle pattern forming, indicating bullish continuation of price successfully breaks above the horizontal resistance near $4.1K. The price action has been respecting the rising trendline, which serves as strong dynamic support, while the upper resistance remains a key level to watch. A decisive breakout above $4.1K could pave the way for a move toward the next resistance at $4.59K, representing a rise of approximately 15% from current levels. On the downside, immediate support is at $3.8K, with stronger support at $3.53K, a potential decline of 12%. 

Access institutional-grade commentary on TradFi × Crypto markets

By TRHX Research

Daily Readings

TradFi

• China’s Regulators Vow to Stabilize Property, Stock Markets

• South Korea's acting president moves to reassure allies, calm markets after Yoon impeachment

• GM’s Cruise robotaxi business is latest growth initiative to falter

• HSBC sued by Australian markets regulator

• Assad dispatched $250mn of Syria’s cash to Moscow

• Storm-hit Russian petroleum tankers trigger fears of fuel spills in Black Sea

• Trump’s recruitment of watchdog chiefs impeded by talk of regulatory cuts

• Israel to shut embassy in Ireland over 'extreme anti-Israel policies'

• UN launches fresh attempt to resolve Libya's election impasse

• Israeli forces carry out air, ground attacks in Gaza; dozens dead

Crypto

• MicroStrategy to join Nasdaq 100, QQQ ETF following 500% rally this year

• Bitcoin hits $106K amid heightened hopes of US Reserve status

• The AI pre-training age will soon come to an end — OpenAI co-founder

• RLUSD stablecoin will increase demand for XRP — Axelar co-founder

• OpenSea Cayman Islands registration fuels token airdrop rumors

• Ethereum liquid restaking TVL surges from $284M to $17B in 2024

• Coinbase legal chief addresses $1B lawsuit tied to wBTC delisting

• BiT Global files lawsuit against Coinbase over allegations of breaching antitrust laws by delisting WBTC

• Riot Platforms bolsters Bitcoin reserves with $510 million purchase

• Cardano Foundation regains social media control amid governance turmoil

• Eigen Foundation pledges 1% of EIGEN token equaling $8M to support Ethereum development

• MegaETH developer raises $10 million in 3 minutes on Cobie's Echo

Deal Flow

• Fantasy.top announces V2 and $4.25 million seed funding from Dragonfly and Manifold Ventures

Yours sincerely,
TRHX Research (Formerly Treehouse Research) 🌳