BTC

ETH

S&P 500 Futures

$60,548.00

$2,454.00

$5,855.00

(-0.28%)

 (-0.45%)

(-0.01%)

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

GM 🌳

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September 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • Declining rates and growing confidence drive bond revival in US; China’s deflationary pressure intensified in September (More in Macro & TradFi)
  • Mt Gox delays repayment deadline to 2025; Trump’s World Liberty Financial project starting public token sale next week (More in DeFi & CeFi)
  • Dogecoin activity surges; Speculative assets lead trading volumes, utility-focused sectors lag (More in On-Chain)
  • The market anticipates increased volatility leading up to the U.S. election; BTC sentiment improves with delayed Mt. Gox repayments (More in Crypto Derivatives)
  • BTC forms a descending channel with the surge on Friday; ETH sees a double bottom, potentially looking at reversal (More in Crypto Technical Analysis)

Macro & TradFi

Investor enthusiasm for bonds is surging as confidence grows in a "soft landing" for the U.S. economy, leading to record inflows into fixed-income exchange-traded funds (ETFs). Financial institutions like BlackRock and JPMorgan Chase reported strong asset growth in Q3, with Pimco’s assets under management reaching $2T. Falling central bank rates and stable economic conditions have sparked a $123B inflow into U.S. bond funds in Q3, as investors increasingly seek the steady returns and diversification benefits of bonds. This trend is expected to continue, with greater shifts into fixed income as rate cuts materialize. The shift reflects a broadening interest in diverse bond strategies, positioning fixed income as a competitive alternative to cash amid a more normalized rate environment.

Elsewhere, China's deflationary pressures intensified in September, with both consumer and factory prices coming in below expectations, prompting further calls for a robust economic stimulus from Beijing. The Consumer Price Index rose only 0.4% year-on-year, missing the forecasted 0.6%, while the Producer Price Index dropped by 2.8%, displaying weak domestic demand amid a protracted property crisis. The upcoming third-quarter GDP report is expected to show growth below the 5% target, highlighting the urgency for additional support measures, particularly as protectionism and global economic challenges weigh on China’s export sector. Despite earlier monetary stimulus moves that sparked a rally in China's stock markets, investors remain cautious. If economic divergence persists, Beijing may need to escalate its policy response, especially ahead of the National People’s Congress meeting where further spending decisions could be formalized.

Lastly, on Friday, major U.S. stock indexes reached new record highs, driven by robust bank earnings and favorable inflation data. The Dow Jones Industrial Average climbed 0.97%, while the S&P 500 rose 0.61%, both setting all-time closing records. The Nasdaq Composite gained 0.33%. This marked the fifth consecutive week of gains for the major indexes, fueled by optimism around the U.S. economy and corporate earnings. Bank stocks were a significant factor in Friday's rally, with JPMorgan Chase rising 4.4% and Wells Fargo surging 5.6%, following strong quarterly results. Conversely, Tesla shares plummeted 8.8%, leading Nasdaq decliners, after revealing its Cybercab robotaxi and other new products. The lack of specific details on Tesla's robotaxi strategy left investors wanting more, which benefited shares of rideshare companies like Uber and Lyft, up 11% and nearly 10%, respectively. Investors will be looking out for US PPI data, which will be released today at 20:30 SGT. The coming week will also close with major banks like JPMorgan and Wells Fargo reporting their earnings. 

DeFi & CeFi

  • Mt. Gox extends creditor repayment deadline to 2025
  • World Liberty Financial announced token sale on 15th Oct
  • Scroll’s listing on Binance sparked discussions
  • Senator Hagerty unveils stablecoin regulation framework to boost US Treasury demand
  • Arkham Intelligence to launch its own derivatives exchange: report
  • Crypto whale loses $36M in major phishing scam causing DETH depeg
  • Avalanche Foundation to repurchase tokens sold to Terra's LFG in 2022 deal, pending court approval

Crypto wallets associated with the defunct Mt. Gox exchange still contains approximately 44,900 BTC valued at $2.8B, after distributing around $6B in assets to creditors earlier this year. The trustee managing Mt. Gox's assets have extended the deadline for repaying remaining creditors by one year, now set for October 31, 2025. This postponement could alleviate immediate concerns regarding potential supply overhangs in the market and reduce short-term volatility; price fluctuations could occur when the remaining funds eventually start moving.

Meanwhile, World Liberty Financial, a new decentralized finance (DeFi) protocol supported by Donald Trump and his family, has announced its WLFI token sale set to open on October 15, just three weeks before the presidential election. The sale is available to all individuals who qualify through the project's whitelist and is aiming to raise $300M at a valuation of $1.5B, with the WLFI token serving as the governance token, enabling holders to vote on protocol development initiatives. The project has garnered public support from members of the Trump family, with Donald Trump designated as "Chief Crypto Advocate" and his sons, Eric and Donald Trump Jr., acting as "Web3 Ambassadors." The protocol plans to launch on Aave's v3 platform on the Ethereum mainnet, facilitating liquidity for assets like ETH, wBTC, and stablecoins.

On-Chain

According to X user Ali_charts, active Dogecoin addresses have surged to 133,880, marking the highest level in eight months. The spike in Dogecoin addresses may signal a potential revival in the memecoin sector, particularly among major tokens like Dogecoin, as market participants speculate on increased crypto adoption. This uptick in activity could suggest renewed investor interest and broader engagement with the token, potentially driving further market momentum.

Over the past week, data from Cryptokoryo's dashboard on narrative-driven trading volumes indicates that memecoins have led the market with the highest traded volume, up 39%. In contrast, DeSci (decentralized science), wallets, and ordinals narratives have underperformed, showing the lowest volume growth, with wallets down by 21%. This suggests a strong market preference for speculative, high-risk assets like memecoins, while more utility-focused narratives have seen less engagement. This trend could highlight a shift towards speculative trading, as market participants respond to short-term price action rather than long-term fundamentals.

Derivatives

  • Funding rate for BTC and ETH remained positive. 
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH increased slightly over the weekend to 57.38% and 63.44% respectively.
  • The 30-day 25-delta skew (C-P) for BTC reverted back into the positive at 1.54 while ETH moved higher to -0.32.
  • The futures market witnessed $305.60M in liquidations in the last 24 hours, with shorts representing 60.79%.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

41.55%

AVAX

OKX

dYdX

31.96%

AVAX

Binance

dYdX

27.40%

DOGE

Binance

dYdX

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.

Over the weekend, the divergence between 7-day and 30-day IV widened, with the 7-day at-the-money IV at 43.55 and the 30-day at-the-money IV rising to 54.79. The divergence suggests the market expects limited short-term price movement but anticipates increased volatility as the U.S. election approaches, signaling it as the next significant market catalyst.

Today's term structure remains in contango, showing little change from yesterday. Notably, the 30-day IV remains higher than the 60-day IV, reinforcing the expectation that the market views the upcoming U.S. election as the next major volatility driver.

BTC call-put skews returned to positive territory, with the 7-day skew at 0.5 and the 30-day at 1.54, signaling market expectations of favorable price movement. This shift may be supported by the delayed Mt. Gox repayment, now postponed to 2025, alleviating fears of a significant selloff that could have occurred with the full repayment.

Lastly, @Paradigm highlighted more bullish BTC structures, aiming for potential upside, whereas ETH showed more neutral to bearish structures, with an expectation of limited price movement. Key BTC trades encompassed the procurement of 755x 27-Dec-24 $80K/$90K custom Call Spread, and 700x 25-Oct-24 $65K Calls. For ETH, notable structures included 6000x 29-Nov-24 $2900 Calls sold, alongside a 6000x 29-Nov-24 $2900 Straddle sold, showcasing significant flows in short-term strategies.

Crypto Technical Analysis

Moving on to technical analysis, BTC surged from $60K to above $62K on Friday and has maintained that level over the weekend. Recent price movements have formed a descending channel, with BTC's price currently hovering near the upper boundary. If this level is broken, the price will likely test the $64K level, followed by a potential test of $66K. However, a short-term reversal is also possible, which could lead the price down to the $58K level if it materializes.

On the other hand, ETH is displaying a more bullish pattern, having rebounded at the $2.35K level on Friday, which has formed a double bottom on the 4-hour chart. This suggests that further bullish momentum is likely, with the next resistance near the $2.7K level. However, traders should remain cautious in case the price pulls back to the $2.35K support for a third time before the bullish momentum materializes.

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TRHX Research (Formerly Treehouse Research) 🌳