BTC

ETH

S&P Futures 500

$65,333.86

$3,273.71

$5,253.75

(-5.77%)

 (-6.14%)

(-0.66%)

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

GM Treehouser 🌳

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March 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • Fed official suggests that three rate cuts are a reasonable baseline for 2024; Oil price rises with lower US inventory (More in Macro & TradFi)
  • US recovers $3.36B in Bitcoin fraud; BNB Chain offers $1M for memecoin devs (More in DeFi & CeFi)
  • US Government transferring stolen BTC funds out, with 2000 BTC transferred to a Coinbase Prime wallet; Net BTC ETF inflow among 9 major providers of 1594 BTC, valued at $103.77M (More in On-Chain)
  • Over 400M Longs liquidated; Implied Volatilities increase across the board (More in Crypto Derivatives)
  • BTC broke its previously identified supporting trendline while ETH declined to a new support zone at $3.3K (More in Crypto Technical Analysis)

Macro & TradFi

Two voting members of the Federal Open Market Committee (FOMC) have indicated their continued expectation that the U.S. central bank will implement a series of interest rate reductions throughout 2024.  While these policymakers anticipate such adjustments, they have emphasized a measured approach, suggesting no immediate urgency to initiate the reductions in interest rates with the current target range for the federal funds rate standing at 5.25% to 5.5%. According to financial futures markets, investors are currently assigning an approximate probability of fifty percent to an initial reduction in the rate occurring in June.

Meanwhile, crude oil prices experienced a sustained increase following the release of an industry report indicating a depletion of United States crude oil stockpiles. This upward momentum precedes a forthcoming meeting of the OPEC+ organization, where member states are anticipated to confirm the continuation of existing production limitations. Futures contracts for Brent crude, the global benchmark, climbed towards $90 per barrel. This upward trend follows Tuesday's closing price, marking the highest level since October. Additionally, estimates indicated declines in both gasoline and distillate inventories and reports revealed a nationwide decrease exceeding 2 million barrels in stockpiles over the past week. This meeting reaffirms the OPEC’s current policy stance on limiting crude oil production.

On Tuesday, the three major U.S. stock indexes fell after data showing strong labor demand raised the prospect that the Federal Reserve could delay cutting interest rates. Dow, S&P 500, and Nasdaq declined by  1%, 0.72%, and 0.95% respectively. TCOM, a China-based travel company, appreciated by 4.15% to close at $48.91 after analysts upgraded it to a buy rating and Citigroup raised their price target on the stock from $53.00 to $55.00. Humana Inc., a healthcare company, experienced a significant decline of 13.41% to close at $304.33. The stock depreciated after the Biden Administration's recent announcement regarding payment adjustments for private Medicare plans fell short of the expectations established by the insurance industry and its investors. This decision places additional strain on insurers, who are already contending with rising healthcare costs and heightened uncertainty related to claims processing in the wake of the ransomware attack on UnitedHealth Group's technology subsidiary. Consequently, government payments to Medicare Advantage plans are expected to rise 3.7% year on year.

CeFi & DeFi

  • US authorities announce conviction connected to Bitcoin stolen from Silk Road
  • BNB Chain puts up a $1 million reward to attract memecoin devs
  • MakerDAO proposes to allocate 600M $DAI to Ethena's USDe
  • MAS expands the scope of regulated payment services
  • Ethena Labs' ENA token goes live
  • DeFi Protocol Cega's launches new options product with Gold and Ether

The U.S. Department of Justice has successfully prosecuted James Zhong for wire fraud, related to his theft of approximately 50,676 Bitcoins from the Silk Road marketplace in 2012. This operation deemed noteworthy due to the combination of advanced cryptocurrency tracing techniques and traditional investigative work, resulted in the recovery of the stolen assets from Zhong's residence in Georgia in November 2021, valued at about $3.36 billion. This case underscores U.S. authorities' persistent and sophisticated approach to uncovering and prosecuting crimes in the digital assets space, demonstrating a clear message that even the most cleverly concealed illicit assets are not beyond the reach of law enforcement. The successful recovery operation also highlights cryptocurrency tracing technologies' growing efficacy and integration with conventional investigative methods, setting a significant precedent for future digital currency fraud investigations.

Elsewhere, the BNB Chain has launched an initiative to incentivize memecoin developers with a $1 million reward, aiming to bolster the memecoin ecosystem on its network. To qualify, developers must deploy their memecoin projects on the BNB Chain and adhere to several criteria, including undergoing at least one security audit and making their project's code publicly available on BscScan. The rewards structure is tiered, based on the trading volume of the deployed memecoins, with requirements ranging from a minimum trading volume of $2 billion for the lowest reward to over $30 billion for the top prize of $1 million. Additionally, projects must demonstrate a significant following, including having over 1,000 token holders and an active presence on social media platforms like Telegram and Discord. The BNB Chain is committed to fostering a vibrant memecoin community, and it reflects the broader industry trend of blockchain networks actively supporting the development and growth of memecoins within their ecosystems. 

On-Chain

According to an analysis by lookonchain, the United States government transferred 30,174.703 BTC, valued at approximately $1.98 billion, from funds seized in connection with the Silk Road marketplace. Of this sum, 2,000 BTC, with a value of $131.65 million, has been directed to a wallet associated with Coinbase Prime. As these Bitcoin holdings were confiscated from a fraud case, the government may be holding on to it for an extended period as investigations are currently ongoing. Traders and investors who are involved should be vigilant about the movements of these funds and be abreast of any news regarding the outcome of the stolen funds.

In another analysis by lookonchain, Grayscale's Bitcoin Trust holdings decreased by 1,535 BTC, representing a decline of approximately $100 million. Their current holdings stand at 333,619 BTC, with an estimated value of $21.7 billion. Conversely, Blackrock's holdings increased by 2,392 BTC, translating to an investment of roughly $155.77 million. Their total holdings now amount to 254,404 BTC, valued at approximately $16.57 billion. Overall, the combined holdings of nine exchange-traded funds (ETFs), including Grayscale, saw a net increase of 1,594 BTC, representing an investment of $103.77 million. Traders should be vigilant of the continued interest from institutions in adopting Bitcoin ETFs over the short to long-term horizon, given that the Bitcoin halving is occurring later this month.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained around the same at 73.47% and 78.18% respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH fell further to 0.59% and -3.14%, respectively.
  • The futures market witnessed $531.72M in liquidations, with longs representing 76.82%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

16.01%

DOGE

Binance

dYdX

15.86%

DOGE

Bybit

OKX

14.91%

ADA

OKX

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.

Today’s chart for the implied volatility (IV) for Bitcoin (BTC) ATMs shows a narrowed gap between short-term and medium-term volatility expectations, with the 7-day maturity IV closely trailing the 30-day, which suggests an alignment of volatility expectations by short-term and medium-term investors.

The term structure for BTC is exhibiting a contango-shaped short-term implied volatility (IV) followed by a gradual leveling off into longer-term maturities. This indicates that the market is bracing for heightened volatility due to the approaching Bitcoin halving event. The market’s short-term focus is likely driven by speculation and positioning ahead of the halving, as traders and investors anticipate potential impacts on supply and price dynamics. As the halving draws nearer, the alignment between the Mark IV and Shadow IV suggests a consensus on volatility expectations post-event, transitioning into a more standard contango shape. This reflects a market sentiment that stabilizes in the longer view, factoring in the new equilibrium expected post-halving.

The BTC 25-Delta skew data shows that the 7-day and 30-day skews have begun a slight convergence, suggesting a market consensus forming around near-term price expectations. Recent price action, with BTC testing and breaking below the 68K level, may have injected some short-term fear. This convergence could also be influenced by expectations of macroeconomic indicators, such as the FOMC's decision to maintain rates, which the market may have priced in. The implied volatility shows signs of balancing out the initial divergences, with a notable decrease in the 7-day skew, indicating less demand for short-term options against price movements as the market anticipates BTC halving.

Lastly, @Paradigm's highlights for BTC: a 550x Call for 12-Apr-24 at $70K bought, a 150x Put Spread for 26-Apr-24 at $61K/$56K bought, and a 125x Iron Condor (multi-leg options trading strategy) for 26-Apr-24 at $58K/$61K/$73K/$76K bought. Puts and Calls for early April were also traded. For ETH: a 2100x Iron Condor for 26-Apr-24, a 1900x custom Put combination for late April and May, and a 1500x Straddle for 5-Apr-24 sold. Call Spreads for late April were purchased as well.

Crypto Technical Analysis

In technical analysis, yesterday's swift downturn in the crypto market drove BTC below the previously identified support at the lower trendline. Presently, the price has stabilized near the $65.5K level, with $65K representing a strong psychological support zone. However, if this level fails to hold, the next immediate support lies near the $61.5K level, indicating a potential downside of 6.1%. Conversely, the previous support zone between $68.5K and $69K acts as a resistance zone if a reversal occurs. Additionally, the RSI has dipped significantly to around 33, hovering near the oversold threshold.

Conversely, ETH has undergone similar price movements as BTC moved lower. Following the decline, the current price of ETH rests near the previously identified support zone at the $3.3K level. Although briefly breached, there hasn't been a definitive confirmation on the technical level. Should this support falter, the next level of support remains at $3.1K, corresponding to the local low. Conversely, the previous upper boundary of the triangle now serves as the immediate resistance, offering a 4.5% upside potential if the bulls reclaim control of the market. The RSI briefly moved past the 30 mark, indicating that it may also be oversold.

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