BTC

ETH

S&P 500 Futures

$56,729.83

$2,379.64

$5,511.25

(-4.22%)

 (-6.08%)

(-2.57%)

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

GM 🌳

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August 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • DOJ escalates antitrust probe into Nvidia's AI dominance; U.S. manufacturing remains weak, fueling Fed rate cut expectations (More in Macro & TradFi)
  • Trump’s new crypto initiative raises questions with its code base; MATIC’s migration to POL will start on Wednesday (More in DeFi & CeFi )
  • Ethereum's wallet growth highlights trader confidence amid Bitcoin stagnation; long-term prospects favor patient investors (More in On-Chain)
  • IVs drop across the board; 80% of liquidations today were longs (More in Crypto Derivatives)
  • BTC tests key 56K support amid bearish momentum; ETH hovers at 2.33K support (More in Crypto Technical Analysis)

Macro & TradFi

The U.S. Department of Justice (DOJ) has escalated its antitrust investigation into Nvidia by issuing subpoenas to the company and other parties, signaling a potential formal complaint. This scrutiny centers on Nvidia’s dominant position in the AI chip market, with concerns that the company may be limiting competition by making it difficult for customers to switch suppliers and by potentially penalizing those who do not exclusively use its chips. Nvidia, whose stock has soared this year due to explosive growth in AI-related sales, defends its market position as a result of superior product performance. This investigation reflects increasing regulatory attention on Nvidia as it becomes a crucial player in AI infrastructure, raising broader questions about competition and access to AI technologies critical for economic and national security.

Meanwhile, U.S. manufacturing data remains weak, with the August PMI rising slightly to 47.2, still below the 50 threshold indicating contraction. New orders and production fell further, suggesting ongoing sluggishness in the sector despite modest improvements in employment. Manufacturers are grappling with higher input costs, and the construction sector also saw a decline, with spending down 0.3% in July, driven by weak demand in residential construction. This continued economic softness aligns with expectations for a modest 25-basis point rate cut by the Federal Reserve in September, as inflationary pressures remain subdued but persistent.

On Tuesday, the S&P 500 fell by 2.12%, closing at 5,528.93, while the Nasdaq Composite dropped 3.26% to 17,136.30, and the Dow Jones Industrial Average declined 1.51%, ending at 40,936.93. Nvidia led the market losses, shedding nearly 10% of its value, which translated to a $279 billion drop in market capitalization, the largest single-day loss in U.S. history. The Philadelphia Semiconductor Index (SOX) also took a significant hit, falling 7.8%. Tesla shares declined by 1.6% following reports of a new six-seat Model Y planned for production in China, and Boeing's stock plunged 7.3% after a downgrade by Wells Fargo. Investors will be looking out for the JOLTS Job Opening data today at 22:00 SGT.

DeFi & CeFi

  • Trump’s World Liberty Financial is reported based on the hacked Dough Finance codes
  • MATIC will be migrated to POL on Wednesday as a part of Polygon 2.0
  • Matter Labs lays off 16% of the team
  • Binance reveals details of the Solana LST, BNSOL
  • CFTC recovers $18M of crypto from a Ponzi scheme

According to a report by CoinDesk, 'World Liberty Financial', the new crypto initiative spearheaded by former President Donald Trump and his sons has outlined in its whitepaper the plans to introduce a borrowing and lending platform, notably similar to the previously hacked Dough Finance. World Liberty Financial aims to launch a non-transferable governance token, WLFI, raising concerns due to the involvement of key team members with ties to Dough Finance. Alongside the Trump family, the project includes seasoned professionals and friends, signaling a potential effort to appeal to crypto-savvy voters ahead of the upcoming elections. Hours after the CoinDesk article, the X social media accounts of Lara and Tiffany Trump were hacked to promote a fraudulent crypto token linked to the project. Eric Trump quickly clarified that the accounts were hacked and warned against engaging with any links or purchasing tokens from these profiles. 

Elsewhere, Polygon is set to replace its existing MATIC token on Wednesday with a new token, POL, as part of an upgrade under its "Polygon 2.0" roadmap to enhance network functionality and scalability. This change, which will happen automatically for users, will transition POL to become the native gas and staking token across the Polygon network, including future chains like the AggLayer. The migration introduces a new emission rate of 2% annually to support validators and a community treasury aimed at fostering ecosystem growth. This move addresses previous technical limitations with MATIC, whose upgrade keys were intentionally burned, preventing further modifications. Marc Boiron, CEO of Polygon Labs, highlighted that this strategic upgrade would enable greater community involvement and decentralization, essential for the network's expansion and sustainability.

On-Chain

Santiment's data reveals a clear divergence in wallet growth between Ethereum and Bitcoin over the past three months. Ethereum has seen a 3.3% increase in total holders, reaching 126.96 million, while Bitcoin experienced a slight decline of 0.1%, with 54.18 million holders. Tether also saw a 4.0% increase, now at 5.99 million holders. This suggests that many may be viewing ETH as an undervalued asset, accumulating it during a period of price stagnation. In contrast, Bitcoin holders appear to be losing confidence in its performance, potentially reallocating their assets to other investments.

According to Avocado_onchain's analysis on CryptoQuant, Bitcoin's price stagnation mirrors patterns seen in 2019, particularly among new investors who have been holding UTXOs for less than six months. These investors, who likely entered around Bitcoin’s March price peak, have either exited due to losses or are transitioning into longer-term holders. Reduced price volatility is attributed to increased over-the-counter (OTC) trading compared to exchange-based trading. A similar structure emerged around the 2019 halving, with Bitcoin taking 490 days to reach a new all-time high. While long-term prospects remain bullish, short-term expectations should be tempered, as new investor capital remains a key driver for future price surges.

Derivatives

  • Funding rates for BTC and ETH turned positive.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained similar at 55.44% and 66.95% respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH dropped to -2,11 and -3.30, respectively.
  • The futures market witnessed $120.67M in liquidations over the last 24 hours, with longs representing 80.5%.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

21.85%

AVAX

Bybit

dYdX

20.80%

SOL

Bybit

OKX

20.10%

SOL

Bybit

Binance

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.

BTC’s 7-day and 30-day IV are both showing an increase with the 7-day IV experiencing a sharper increase, now sitting at 46.14%, while the 30-day IV is slightly lower at 50.42%. The significant movement in the 7-day IV reflects the market's immediate reaction to the price drop of BTC to $56K, with traders anticipating short-term turbulence.

The BTC term structure maintains a contango pattern, with a noticeable uptick in IV in the shorter durations, particularly up to seven days, following the recent sharp price dip.

The skew constant maturity for BTC has been trending downward, particularly for the 7-day maturity, which recently plunged into negative territory, reflecting increased demand for puts as traders brace for further downside risk following the recent BTC price crash to $56K. This sharp decline in the 7-day skew suggests heightened short-term concerns, with market participants aggressively seeking protection against potential further declines. In contrast, the 30-day skew has also decreased but remains more stable, indicating a less intense but still cautious outlook for BTC over the longer term. 

Lastly, @Paradigm highlighted that key BTC trades included the sale of 320x 20-Sep-24 $54K/$65K Strangle and 179x 27-Sep-24 $55K/$49K Put Spread, alongside the purchase of 500x 29-Nov-24 $35K Put and 200x 13-Sep-24 $61K/$64K Call Spread. In ETH, notable activities involved the purchase of 2000x +1.00-Call-27 Dec 24 $2.4K / -1.70-Call-27 Dec 24 $4.5K Custom Strategy and 1000x 27-Sep-24 $3K/$2.4K Put Spread, as well as the sale of 1000x 6-Sep-24 $2.55K / 20-Sep-24 $2.45K Put Calendar.

Crypto Technical Analysis

Moving on to technical analysis, BTC has tumbled to test the key support level at 56K, following a sharp decline of approximately 2.67%. The price is currently hovering around this critical threshold, and should it break below, the next significant support level lies around 54K, representing a further potential downside. Conversely, resistance is situated at 59.6K, which aligns with the 200-period moving average. RSI is currently at 29.8, indicating oversold conditions and suggesting that downward momentum may be nearing exhaustion, though the bearish trend persists.

ETH has tumbled down to test the key support level at 2.33K, following a sharp decline of 3.70%. The price is currently hovering at this crucial support zone, and a break below this level could lead to further downside toward the next support at 2.20K. On the upside, immediate resistance is found at 2.52K, aligned with the 100-period moving average. RSI is currently at 27.8, indicating oversold conditions, which could suggest a potential bounce if the bearish pressure subsides. However, the downward momentum remains dominant as ETH tests this critical level.

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