BTC

ETH

S&P 500 Futures

$100,835.00

$3,652.50

$5,954.75

(-4.96%)

 (-5.93%)

(-2.81%)

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

GM 🌳

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November 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • Fed cuts benchmark rate by 25bps while implying fewer cuts ahead based on inflation metrics; UK inflation rose to 2.6% in November (More in Macro & TradFi)
  • Powell reaffirms Fed's Bitcoin prohibition amid national reserve debates; Coinbase delists wBTC citing custodial concerns (More in DeFi & CeFi)
  • BTC holdings shift from LTH to STH; Marathon Digital accumulates 1,627 BTC worth $166M (More in On-Chain)
  • BTC 7-day skew tanks; Over $570M Longs liquidated (More in Crypto Derivatives)
  • BTC tests the bottom of its ascending channel; ETH approaches critical support with bearish momentum (More in Crypto Technical Analysis)

Macro & TradFi

The Federal Reserve has lowered its benchmark interest rate by a quarter point for the third consecutive time, bringing it to a range of 4.25%-4.5%. Despite signaling that future cuts are still on the table, Fed Chair Jerome Powell emphasized that further rate reductions will require tangible progress on inflation. The Fed’s new projections show that officials now expect just two quarter-point cuts in 2025, with the benchmark rate potentially reaching a range of 3.75%-4% by the end of the year. While inflation is still above the Fed's 2% target, Powell remains confident that inflation will continue to decline, especially with expected slowdowns in housing costs. The labor market has been resilient, though inflationary pressures persist, prompting some officials to slow down the pace of cuts. Powell also addressed the uncertainty surrounding President-elect Donald Trump’s potential policies, noting that their impact on inflation and the labor market is unclear and thus not yet factored into the Fed's decision-making. The Fed’s cautious approach highlights the challenges of navigating inflation while supporting economic growth and labor market stability.

In other news, UK inflation rose to 2.6% in November, aligning with economists' expectations and marking the second consecutive monthly increase. Core inflation, excluding energy, food, alcohol, and tobacco, stood at 3.5%, slightly below the forecast of 3.6%. The rise in inflation was attributed to factors such as higher energy prices, including an increase in the energy price cap, and ongoing pressure from a tight domestic labor market. These trends are expected to continue in the coming months, with concerns about structural issues like higher public sector pay settlements and increased business tax contributions. The persistence of inflation in the services sector, which dominates the UK economy, has led to expectations that the Bank of England will not cut interest rates in its December meeting. The pound traded lower following the inflation data release, reflecting ongoing economic challenges.

On December 18, 2024, U.S. stocks plunged following the Federal Reserve’s quarter-point rate cut, as officials signaled fewer cuts ahead. The Dow Jones Industrial Average dropped 2.6%, or over 1,100 points, extending its losing streak to 10 days—the longest since 1974—while the S&P 500 and Nasdaq fell 3% and 3.6%, respectively. Treasury yields spiked, with the 10-year hitting 4.51%. Tech giants all lost ground; Tesla slid 8.3% and Nvidia dipped 1.1%. Sectors sensitive to interest rates, like consumer discretionary and real estate, were hit hardest. Healthcare stocks rebounded from recent losses, while chipmaker Micron fell 4.3% before earnings and tumbled further in after-hours trading. Bitcoin retreated from record highs, and both gold and oil prices declined.

DeFi & CeFi

  • Fed Chair Powell says, 'We're not allowed to own Bitcoin'
  • Federal judge says Coinbase is permitted to delist wBTC
  • Crypto-AI startup Fraction AI raises $6 million in pre-seed funding
  • World Liberty Financial and Ethena eye collaboration starting with sUSDe
  • Omni Network launches 'Core' mainnet to unify Ethereum's fragmented rollup ecosystem
  • Hong Kong's HashKey Group launches Ethereum Layer 2 HashKey Chain on mainnet

Federal Reserve Chair Jerome Powell reaffirmed that the Fed is prohibited from owning Bitcoin under the Federal Reserve Act and is not seeking legislative changes to enable such holdings. This contrasts with Senator Cynthia Lummis's proposal that the U.S. Treasury accumulate one million Bitcoin over five years and growing political discussions on creating a strategic Bitcoin reserve, supported by figures like Donald Trump. States like Pennsylvania have also proposed bills to allow investment in bitcoin and digital assets. Critics, such as former New York Fed President Bill Dudley, warn against such measures, citing risks to Americans. Bitcoin’s price dropped 5% after the Fed announced a 25-basis-point rate cut and Powell dismissed government bitcoin ownership, reflecting investor sensitivity to the idea of a national bitcoin reserve. Analysts predict sovereign wealth funds, particularly in Asia and the Middle East, are more likely to lead the next wave of institutional Bitcoin adoption.

In other news, a California federal judge has ruled that Coinbase is within its rights to delist wrapped bitcoin (wBTC), rejecting a request from Justin Sun-affiliated BiT Global for a temporary restraining order to halt the move. Coinbase announced its intent to delist wBTC following its custodian's partnership with BiT Global, citing concerns over Sun's history of alleged financial misconduct. BiT Global argued the delisting would cause irreparable harm and accused Coinbase of anti-competitive behavior and libel. However, the court found no merit in the claims, emphasizing Coinbase's discretion as a private entity to determine its platform offerings. Coinbase also defended its actions by noting it accounts for less than 1% of wBTC trading volume, countering allegations of monopolistic intent.  

On-Chain

On-chain analysis by Glassnode showed that Bitcoin’s current market dynamics showcase notable similarities to prior cycles despite differences in market size and composition. With Bitcoin trading above $100K for several weeks, Long-Term Holders (LTHs) are distributing significant supply, resulting in a record-breaking $2.1B in daily realized profits, particularly from coins held for 6-12 months. Meanwhile, the percentage of network wealth held by newer investors is rising sharply, highlighting robust demand but also signaling a transition in wealth away from mature holders, typical of late-stage bull markets. The current cycle has seen year-to-date returns of over 150%, with its drawdowns being less severe compared to prior cycles, possibly due to institutional demand and spot ETF-driven liquidity. While the 6-12 month cohort dominates sell-side activity, older cohorts remain relatively dormant, likely waiting for higher prices. The market’s unrealized profit levels, as measured by the AVIV Ratio, suggest there is still room for further price growth before reaching speculative saturation.

On-chain data by Lookonchain revealed that Marathon Digital has accumulated 1,627 BTC, valued at approximately $166M, in the past 8 hours. Marathon’s substantial acquisition shows the company’s commitment to expanding its Bitcoin holdings, likely reflecting confidence in Bitcoin's long-term potential amidst its recent price strength. Such aggressive accumulation by institutional entities like Marathon Digital can act as a bullish signal, adding to demand and potentially influencing market dynamics as they continue to build their strategic reserves.

Derivatives

  • The funding rate for BTC and ETH remained positive.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained flat at 60.57 and 73.30 respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH dropped to -0.67 and -1.83 respectively.
  • The futures market witnessed $670.77M in liquidations over the past 24 hours with 85.08% representing longs.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

17.04%

ADA

OKX

Bybit

16.74%

XRP

OKX

Bybit

14.32%

ADA

OKX

Bybit

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.

In the past day, BTC's 7-day ATM IV saw a slight upward movement, indicating an increase in short-term volatility expectations. The 30-day ATM IV also trended upward but at a slower pace, reflecting steadier medium-term sentiment. This alignment suggests a modest rise in market uncertainty across timeframes, possibly in anticipation of today’s FOMC meeting.

BTC's term structure has flipped into backwardation - with short-term IV higher than long-term IV. Over the past day, the curve has steepened slightly, reflecting reduced near-term uncertainty and increasing volatility expectations for longer expiries. 

Over the past day, BTC’s 7-day skew dropped sharply, signaling increased demand for puts relative to calls in the short term. Meanwhile, the 30-day skew experienced a more gradual decline, reflecting a shift toward a bearish sentiment but with less intensity compared to the short term. The divergence suggests heightened near-term caution among traders, potentially due to Powell announcing that the Fed is not allowed to hold BTC. 

Lastly, @Paradigm highlighted diverse activity in BTC and ETH options. For BTC, key trades included the sale of a 700x 28-Mar-25 $100K/$130K Call Spread, the purchase of a 650x 27-Dec-24 $97K Put, and the purchase of a 300x 3-Jan-25 $105K/$110K Call Spread. For ETH, notable activity included the purchase of a 3000x custom put spread (-1.50 Put 27-Dec-24 $3.4K, +1.00 Put 27-Dec-24 $3.7K) and the sale of a 1000x Call Calendar spread (27-Dec-24 $3.1K / 31-Jan-25 $3.7K).

Crypto Technical Analysis

BTC has moved toward the bottom of the ascending channel's trendline after hovering near the upper boundary for an extended period. The price action now tests the lower trendline around the $100K level, reflecting a possible breakdown or bounce scenario. Immediate support is at $96K, a key level to watch should the channel break. Conversely, resistance remains at the ATH at $108K, near the upper boundary of the channel. The RSI has dropped to 33.75, signaling bearish momentum as it approaches oversold territory, which could prompt a corrective bounce or continuation of the downtrend.

ETH has similarly tumbled downward, approaching the key support level at $3.6K after a period of consolidation near the $3.9K-$4K resistance zone. ETH’s decline signals increased bearish pressure, and the support level around $3.6K becomes critical to monitor for potential bounce activity or a continuation of the downtrend. If this support is breached, the next key level is at $3.4K. The RSI has dropped sharply to 28.03, entering oversold territory, indicating a potential for a short-term rebound, though the prevailing momentum remains bearish.

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