BTC

ETH

S&P Futures 500

$25,798.88

$1,632.93

$4,502.00

(+0.13%)

 (+0.43%)

(-0.26%)

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

GM Treehouser 🌳

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August 2023 Market Recap

Our Daily View

What We Are Covering Today

  • Christopher Waller signals cautious approach to immediate monetary tightening; Country Garden averts default on dollar bonds (more in Macro & TradFi)
  • Coinbase launches crypto lending service for US institutional investors; Connext Airdrop marred by $38K Sybil attack (more in DeFi & CeFi)
  • 1inch accumulate a further 3,076 $ETH for a total of 12,529 $ETH; $FLM doubles in price over less than three days (more in On-Chain)
  • BTC 30-day C-P skew dwindles lower while longer-term skew remains positive as it signals optimism amid distant catalysts (more in Crypto Derivatives)
  • BTC's weekly KDJ indicates deceleration; BTC and ETH test pivotal supports (more in Crypto Technical Analysis)

Macro & TradFi

In recent macroeconomic developments, the Federal Reserve is signaling a cautious approach to immediate monetary tightening, with top official Christopher Waller highlighting the neutral-to-positive economic data from the past week. Waller's sentiments align with those of Fed Chair Jay Powell, who recently expressed similar views. Labor market reports have shown a moderating yet strong demand for workers in the US. After raising its benchmark interest rate by over 5 percentage points since March 2022, the central bank is observing inflation inching closer to its 2% target. Although most forecasts suggest a potential rate hike, with the federal funds rate expected to reach between 5.5% and 5.75%, experts believe the rate-rising phase might be nearing its end. Waller remains optimistic, downplaying concerns of significant job losses or recession due to inflation adjustments. However, the possibility of further actions should not be discounted, especially if economic growth outpaces expectations.

Elsewhere, Country Garden averted a potential technical default by making payments on two dollar bonds within their grace periods, drawing significant attention from global investors wary of China's turbulent property sector. Despite once being recognized as one of China's sturdiest property developers, Country Garden has seen its stock plummet over 60% this year. As Beijing attempts to control the decline of its real estate industry, accounting for nearly a quarter of the nation's annual economic activity, Country Garden's financial maneuvers echo broader concerns. Even with recent mortgage rule relaxations in major cities, the liquidity crisis in China's real estate remains a persistent challenge. By the close of the year, developers are confronted with $38B in bond payments, emphasizing the pressing financial strains in this sector.

US equities exhibited mixed performance as the holiday-shortened week commenced, as the S&P 500, DJIA, and Nasdaq Composite fell 0.42%, 0.56%, and 0.077% respectively. Meanwhile, Asian equity markets were mixed as Japan’s Nikkei 225 rose 0.57% and South Korea’s Kospi dipped 0.3%. Vice Finance Minister Masato Kanda indicated potential intervention as the USD/JPY currency pair surpassed 147, mirroring levels that prompted the Bank of Japan's market involvement last year. Traders will closely monitor the forthcoming ISM Non-Manufacturing PMI data set to release tonight, September 6.

DeFi & CeFi

  • Coinbase launches crypto lending service for US institutional investors
  • Connext Network airdrop marred by $38K sybil attack
  • MetaMask now allows users to sell crypto for fiat
  • Circle brings native token USDC to Optimism and Base
  • Singapore credit card issuer DCS launches payment token DUS
  • Visa taps into Solana to widen USDC payment capability

Coinbase has introduced a crypto lending service targeting US institutional investors. Customers of Coinbase’s Prime service have already invested $57M in the lending program, which is available to institutions and allows them to lend crypto assets to Coinbase in exchange for collateral exceeding the loan’s value. Coinbase can then provide secured loans to institutional trading clients, similar to traditional prime brokerage services offered in traditional finance. Previously, Coinbase attempted to initiate a lending service to retail investors, which was shut down due to regulatory issues. The new institutional lending service faces less regulatory hurdles, though it also presumes that institutions have the sophistication to handle it. The move comes as other crypto lending firms like Celsius Network, BlockFi, and Genesis Global faced significant losses in the past year, due to their risk-taking endeavors that didn’t pay off.

In other news, Connext Network faced a sybil attack during its native token airdrop. The total airdrop size, which involved over 105M tokens distributed to nearly 60K wallets, was announced after the completion of its Community Sybil Hunter programme. A wallet created just four hours before the airdrop exploited the protocol by filtering over 200 claims to itself through multiple wallets. This sybil attack strategy successfully bypassed the airdrop’s restriction of one claim per wallet. The attacker then converted the $NEXT tokens into $USDT and $ETH, making around $38K in profit shortly after the airdrop. The airdrop user interface was apparently taken offline from being flooded with requests by the perpetrator’s wallet.

On-Chain

According to @lookonchain, 1inch Investment Fund has made a strategic acquisition using 5M $USDT to acquire an additional 3,076 $ETH at a unit price of $1,625. As of now, their wallet reflects a robust holding of 26.8M $USDT alongside a significant stash of 12,529 $ETH, amounting to a valuation of approximately $20.46M. This acquisition, at what appears to be a favorable price point, underscores the fund's bullish stance on Ethereum in the current market environment and may signal their anticipation of a potential upside in the near to medium term.

According to @santimentfeed, FlamingoFinance or $FLM, currently the 338th largest crypto asset by market capitalization, has exhibited remarkable growth. Over a span of just three days, $FLM has more than doubled, accompanied by a surge in trading volume. This comes alongside heightened discourse on platforms like Twitter, signifying increased investor attention. Such rapid shifts in both price and social sentiment underscore high volatility and implies a heightened market interest that stakeholders should monitor closely.

Crypto Derivatives

  • Funding rate remains positive on both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC rose to 39.53% and fell to 37.22% for ETH.
  • 30-day 25-delta skew (C-P) eased slightly higher for BTC and ETH, currently at -4.23% and -4.27% respectively.
  • The futures market witnessed $40.45M worth of liquidations in the last 24 hours with shorts representing 55% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

15.65%

SOL

OKX

Bybit

10.79%

BNB

Bybit

Binance

8.32%

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.

Yesterday, during the US trading session, Bitcoin's ATM implied volatility saw a modest uptick, reaching approximately 34.3% for 7-day options and 35.5% for 30-day options as spot prices fluctuated within their range with increased volatility following the holiday on Monday.

Meanwhile, the term structures for both BTC and ETH remained largely stable, showing a minor increase in short-term implied volatilities, while the medium to longer-dated portion of the curve saw a decrease.

Elsewhere, the 30-day (call-put) skew for BTC is steadily decreasing, moving deeper into negative territory, whereas skews for longer durations like the 180-day remain positive. This divergence suggests a short-term bearish outlook, but a longer-term bullish view due to possible catalysts like the potential approval of a spot ETF and the Bitcoin halving event expected in 2024.

Lastly, @Paradigm's reported flows were a mix of calls and puts, with takers showing a preference for options with closer expiration dates. Traders are resolute in their favor of purchasing downside protection on BTC for near-term tenors as indicated by the falling skew. Meanwhile, ETH is experiencing increased demand for upside volatility on the September and November expirations. Notable transactions include the purchase of a 600x 29-Dec-23 35000 Call (dx) sold and a 7,500x 22-Sep-23 $1.7K outright call bought on ETH.

Crypto Technical Analysis

Moving on to Technical Analysis, on the weekly chart, as BTC entered September, its KDJ stochastic indicator signaled an overbought downturn, suggesting a deceleration in its bullish trajectory. Historically, overbought downturns in December 2017 and early 2021 marked major price tops. At present, with the D line registering at 48.29, Bitcoin appears to be on a downtrend to the oversold threshold, set typically at 20.

On the daily chart, BTC hovers around the $25.7K mark, actively challenging its support at this juncture. A failure to maintain this critical support level could lead to a descent toward the $21.1K benchmark, signifying a potential decline of roughly 18%. Conversely, the next prominent resistance to watch stands at $28K. With the RSI currently registering at 36.66 and displaying a lateral movement, it suggests that Bitcoin remains in a potentially oversold state at the daily scale.

On the daily chart of ETH, the asset is presently trading near the $1.63K mark, mirroring BTC's testing of its respective support level. Should ETH fail to maintain this support, a potential slide to the subsequent support at $1.47K looms, indicating a decline of 9.96% from its current position. The next resistance for ETH stands prominently at $1.95K. The RSI registers at 36.99, reflecting a stabilization in momentum. Moreover, the daily chart reveals a descending triangle formation, characterized by a downtrend line converging with a horizontal support. Historically, this pattern often precedes bearish movements, suggesting that ETH's trajectory may lean towards the downside in the near term.

Access institutional-grade commentary on TradFi Ă— Crypto markets

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Treehouse Research 🌳