🌳 Citigroup's China Expansion Delayed; SEC Approves BlackRock's Spot Bitcoin ETF Options

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Our Daily View

What We Are Covering Today

• Citigroup's China expansion delayed; Middle Eastern sovereign wealth funds ramp up AI investments (More in Macro & TradFi)
• SEC approves BlackRock's spot Bitcoin ETF options; MicroStrategy increase BTC holdings (More in DeFi & CeFi)
• Recent Bitcoin on-chain metrics signal market stabilization (More in On-Chain)
• BTC sees short-term IV spikes, while longer-term IV stays flat (More in Crypto Derivatives)
• BTC and ETH approach key resistance levels with RSI levels nearing overbought territory (More in Crypto Technical Analysis)

Citigroup's plans to expand in China have been delayed due to a lack of clearance from U.S. regulators, specifically the Federal Reserve, Bloomberg News reports. The bank was penalized for inadequate data management and risk controls, resulting in a $136 million fine in July. This setback has complicated its efforts to secure regulatory approval in China, where it seeks to establish a standalone securities firm. Despite the delay, Citigroup remains engaged with Chinese regulators and committed to its expansion, though the situation remains fluid. 

Meanwhile, Middle Eastern sovereign wealth funds, particularly from oil-rich nations like Saudi Arabia, the UAE, Kuwait, and Qatar, are significantly increasing their investments in AI start-ups to diversify their economies. In the past year, these investments have grown fivefold, with funds like UAE's MGX participating in OpenAI's latest funding round. Sovereign funds, benefiting from rising energy prices, are using their vast resources to back AI ventures, with the Saudi Public Investment Fund (PIF) leading in size at $925 billion. These investments align with long-term economic diversification goals, such as Saudi Arabia's Vision 2030. However, geopolitical concerns, such as human rights issues, have caused some start-ups to hesitate, as seen with Anthropic.

Lastly, U.S. stocks ended mostly flat on Friday, with the Dow edging up to a record close, while the S&P 500 and Nasdaq dipped slightly after a strong rally earlier in the week. Investors showed caution following an unexpected 50-basis-point rate cut by the Federal Reserve. Fed Governor Christopher Waller's comments raised expectations for another 50-basis-point cut in November, though market participants remain divided on the likelihood. The Dow rose 0.09%, while the S&P 500 and Nasdaq lost 0.19% and 0.36%, respectively. For the week, all three major indexes posted gains of over 1%, with the Dow leading at 1.62%. Utilities surged, bolstered by Constellation Energy's deal with Microsoft, while Intel gained on speculation of a Qualcomm takeover. Despite the Fed's monetary easing, high valuations, particularly in large-cap growth stocks, continue to concern investors.

DeFi & CeFi

• SEC approves BlackRock’s spot BTC ETF options
• MicroStrategy Boosts Bitcoin Holdings
• Travala expands booking support to Solana-based assets, offers SOL travel rewards
• Coinbase brings cbBTC to Solana

Over the weekend, the U.S. Securities and Exchange Commission (SEC) approved the listing and trading of options for BlackRock's spot bitcoin exchange-traded fund (ETF), iShares Bitcoin Trust, on the Nasdaq with the ticker symbol "IBIT." This move allows institutional investors and traders to use options as a more efficient and cost-effective tool to hedge or amplify their exposure to Bitcoin. The approval marks another step toward mainstream acceptance of cryptocurrency as an asset class following the launch of bitcoin ETFs earlier this year.

In other news, MicroStrategy has expanded its Bitcoin holdings by acquiring 7,420 BTC for $458.2 million, bringing its total holdings to 252,220 BTC, currently valued at nearly $16 billion. The acquisition was funded through an upsized $1.01 billion convertible note offering, increased from an initial $700 million. This purchase, made at an average price of $61,750 per BTC, further solidifies MicroStrategy's position as the largest corporate holder of Bitcoin, continuing its strategy of using debt to accumulate BTC. Despite this, the company's shares dipped 1.5% as both BTC and U.S. equity markets softened.

On-Chain

In an on-chain analysis by CryptoQuant, recent declines in Bitcoin's "Supply in Profit," an on-chain metric reflecting the proportion of Bitcoin holdings currently in profit based on the market price, highlight significant shifts in market sentiment. As Bitcoin's price drops, fewer investors hold profitable positions, leading to reduced selling pressure and potentially stabilizing the market. The current level of Supply in Profit has approached a critical psychological inflection point, and it could trigger renewed optimism and drive a market recovery.

Derivatives

• Funding rates for BTC and ETH remain positive. 
• Deribit Implied Volatility Index (DVOL) for BTC and ETH remained flat at 51.11% and 61.84% respectively.
• The 30-day 25-delta skew (C-P) for BTC and ETH increased to 0.69 and 0.22, respectively.
• The futures market witnessed $325.17M in liquidations over the weekend with longs representing 55.42%.

Over the weekend, BTC experienced a significant increase in 7-day ATM IV, while the 30-day IV remained relatively flat. This suggests that the market anticipates short-term price movement or uncertainty, but expects the recent rally to stabilize, leading to consistent volatility expectations over the next month.

Bitcoin's term structure supports the analysis above, as the overall curve maintains a contango structure. While there have been minimal changes across the curve, there is an increase in implied volatility on the front end with short-dated option contracts.

BTC’s 7-day skew experienced heightened volatility over the weekend, while the 30-day call-put skews remained largely unchanged in the neutral zone. This suggests that the market is uncertain about BTC's future direction, leading to instability in the skewness near the neutral territory.

Crypto Technical Analysis

Moving on to technical analysis, BTC is approaching a key resistance zone near $64K-$65K, which has acted as a significant resistance level in the past. The price has been in an uptrend for the past few days, indicated by the series of higher highs and higher lows as it pushes toward this resistance level. If the price breaks above this zone, it could signal further bullish momentum where the following resistance level lies at $69.8K, a 9.24% upside. The support level is present at approximately $57K, representing a 10.7% downside. RSI level is at 66.57 and approaching overbought territory, reinforcing the bullish sentiment in BTC. 

On the other hand, ETH has exhibited bullish momentum over the past several days with its price currently at $2.6K and approaching a key resistance zone at $2.7K, a 3.8% appreciation, with this zone potentially acting as a potential reversal or consolidation zone. If the price retraces, the support level is at $2.2K, which has shown to be a consistent base whenever the price retraced in the past, thus serving as a critical level to watch for a potential bounce. RSI level is at 69.70, and approaching the overbought zone. Traders should be cautious of a potential short-term pullback or consolidation should buying pressure wane.

Access institutional-grade commentary on TradFi × Crypto markets

By TRHX Research

Daily Readings

TradFi

• House Speaker Johnson axes Trump voting restrictions in new funding bill

• 741 former military and national security officials endorse Harris over Trump

• Harris agrees to CNN debate on Oct. 23, Trump says 'it's too late'

• Striking Boeing workers prepare for lengthy stoppage: 'I can last as long as it takes'

• Intel's wild week leaves Wall Street more uncertain than ever about chipmaker's future

• US warns Israel against full-scale war with Hizbollah

• REA Group raises bid for UK rival Rightmove

• European steelmakers plead with Brussels to tackle flood of Chinese exports

• Germany’s SPD leads far right in Brandenburg election

• Neo-Marxist Dissanayake upsets odds to win Sri Lanka presidency

• Apollo to Offer Multibillion-Dollar Investment in Intel

• Biden Administration to Prepare Ban on Chinese Car Software

Crypto

• MicroStrategy Boosts Bitcoin Holdings With $458M Purchase, Upsized Convertible Note Offering to $1B

• Samourai Wallet forked into 'Ashigaru' Open Source Project

• Coinbase chief legal officer responds to cbBTC service terms fears

• Kamala Harris leading in 4 of 6 swing states on Polymarket

• African economies show high potential for digital asset adoption

• IMF staff propose REDI framework to catalyze CBDC adoption

• US judge slaps $36M fine on man for 5-year crypto investor fraud

• Bitcoin is pinned below $65K but several market structure-altering factors are at play

• Coinbase’s cbBTC wrapped Bitcoin coming to Solana — Breakpoint 2024

• Indian Supreme Court recovers YouTube account from XRP scammers

• Crypto lender Shezmu recovers hacked funds through negotiation

• Security firm CertiK’s new venture firm unveils $45 million investment plan

• Ethereum transaction fees surge even as active accounts fall to year-to-date lows

• Travala expands booking support to Solana-based assets, offers SOL travel rewards

• SEC approves BlackRock's spot bitcoin ETF options listing

Yours sincerely,
TRHX Research (Formerly Treehouse Research) 🌳