BTC

ETH

S&P Futures 500

$27,947.50

$1,724.25

$4,347.75

(+3.19%)

 (+4.20%)

(+0.43%)

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

GM Treehouser 🌳

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August 2023 Market Recap

Our Daily View

What We Are Covering Today

  • Federal Reserve signals rate hikes amid inflation; China's manufacturing faces economic challenges (more in Macro & TradFi)
  • Three Arrows Capital’s Zhu Su arrested in Singapore; VanEck to donate 10% of profits from Ether ETF to core developers (more in DeFi & CeFi)
  • ‘FTX Wallet Drainer’ has orchestrated transfers totaling 22,500 Ethereum in the last 48 hours; Whales demonstrating bullish $ETH accumulation and staking (more in On-Chain)
  • Implied volatilities rose for both BTC and ETH from the surprise price pump as the weekend finishes (more in Crypto Derivatives)
  • BTC and ETH experience massive surges, now edging towards their respective resistance levels as bullish market sentiment firmly emerges (Crypto Technical Analysis)

Macro & TradFi

The Federal Reserve's core PCE deflator, a key inflation indicator, increased by 3.9% YoY in August, a decline from July's 4.2%, aligning with FactSet's economist predictions. This suggests a stabilization in inflationary pressures after a summer surge. Despite this, the central bank's recent indications of potential interest rate hikes have led to heightened market volatility, with 10-year Treasury yields surging to their highest since 2007 at over 4.6%. Concurrently, energy-driven inflation persists, evidenced by the West Texas Intermediate crude's recent ascent past $95 a barrel. Market sentiment indicates a 33% probability of a Fed rate hike by mid-December.

In other news, China's manufacturing activity slowed in September, with the Caixin/S&P Global PMI dropping to 50.6 from 51.0, missing the anticipated 51.2. Despite signs of economic stabilization, challenges persist, including a property downturn, declining exports, and rising youth unemployment. While factory output and new orders expanded, weak external demand led to a third consecutive month of contraction in export orders. Rising input costs, attributed to chemicals, crude oil, and industrial metals, further pressured manufacturers. Amid these challenges, the central bank reduced banks' reserve requirements in September, but S&P Global Ratings anticipates limited fiscal or monetary stimulus in the near term, highlighting China's shift from debt-driven growth.

US equities ended mixed on Friday, with the S&P 500 down 0.27%, the NASDAQ Composite up 0.08%, and the DJIA declining 0.47%, marking 2023's worst quarter for these major indices. In Europe, the Stoxx 600 and Germany’s Dax both rose by 0.4%. The Hang Seng Tech index surged 3.8% after China's primary internet regulator proposed a rule to streamline cross-border data transfers. Investors are now focusing on the US ISM Manufacturing PMI data released today at 22:00 SGT, followed by the JOLTs Job Openings data set for 3 October.

DeFi & CeFi

  • Three Arrows Capital’s Zhu Su arrested in Singapore
  • VanEck to donate 10% of profits from Ether ETF to core developers
  • Bitwise announces Ethereum ETF launch on Oct 2
  • Vitalik Buterin voices concerns over DAOs approving ETH staking pool operators
  • Circle launches Circle Research and Perimeter Protocol

Zhu Su, co-founder of Three Arrows Capital (3AC), was arrested in Singapore as he attempted to leave the country. This arrest came after the Singapore Courts granted a committal order against him for failing to comply with a court order related to the recovery of funds for creditors of 3AC. Zhu has been sentenced to four months' imprisonment. The Monetary Authority of Singapore has also prohibited Zhu and his co-founder, Davies, from conducting regulated investment activity for nine years each. A similar committal order was also granted against Kyle Davies, whose whereabouts remain unknown.

In other news, global asset manager VanEck has announced that it will donate 10% of all profits from its upcoming Ethereum futures exchange-traded fund (ETF) to Ethereum core developers for a period of 10 years. The beneficiary of this initiative will be the Protocol Guild, a group consisting of over 150 developers who are responsible for maintaining Ethereum's core technology. VanEck stated their belief in the importance of asset managers’ contributions to the community building the crypto protocol. Ethereum core developers received over $12M in donations for their work thus far, and VanEck's donation reflects increased collaboration between traditional finance and Ethereum's developer community.

On-Chain

According to @lookonchain, "FTX Accounts Drainer" has executed a transfer of 7,500 Ethereum (approximately $12.6M) in the last 24 hours, adding to a series of substantial movements. Over the past two days, the FTX Accounts Drainer has orchestrated transfers totaling 22,500 ETH (equivalent to approximately $38M), leaving its current balance at a remarkable 163,235 Ethereum (approximately $275M). Stakeholders and market participants should exercise extreme caution to these conspicuous fund movements, especially given the history behind the calamity of FTX under Sam Bankman-Fried.

In recent on-chain data reported by @lookonchain, a number of 'whales' have been actively accumulating and staking ETH. Notably, Whale "0x7838" has executed a substantial withdrawal of 4,288 ETH (valued at approximately $7.2M) from Binance to his wallet. Similarly, a fresh wallet, "0x4b7B", has also withdrawn a hefty sum of 9,530 ETH (equivalent to $16M) from Binance also for staking purposes. The implications of these deliberate accumulation and staking activities by influential market entities are significant. It suggests a collective anticipation of a bullish market trajectory for Ethereum, with these key market players exhibiting confidence in the asset’s long-term value.

Crypto Derivatives

  • Funding rates flipped to positive for both BTC and ETH
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH retreated to 36.29% and 36.12%, respectively
  • 30-day 25-delta skew (C-P) on both BTC and ETH jumped to 0.91% and 0.12%, respectively
  • The futures market witnessed $192.41M worth of liquidations since Friday, with shorts representing 76.63% of the total

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

18.53%

BTC

OKX

dYdX

9.20%

SOL

Bybit

OKX

6.60%

XRP

OKX

Binance

Source: @CexyArbBot Telegram Bot

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 initially experienced subdued implied volatility (IV), which dropped from 28.07% (7-day) and 31.39% (30-day) on Friday to a low of 24.59% and 27.79%, respectively. However, the unexpected BTC price surge over the weekend has pushed IVs back up, with both the 7-day and 30-day at-the-money (ATM) IVs currently resting at close to 37.8%. In contrast, ETH, although it also witnessed a sudden price spike, only saw a rapid increase in the 7-day ATM IV, suggesting that traders anticipate the price returning to its normal volatility range in the medium term.

Despite market volatility, the term structures for both BTC and ETH consistently exhibit a contango state, with no significant deviations on a one-day lookback, except for a marginal increase at the front end of the curve.

Moreover, the 7-day and 30-day 25 delta (C-P) skew for both BTC and ETH remain in the neutrality zone with minimal changes since Friday. Specifically, the 30-day C-P skew has risen from -0.25% to 0.79%, indicating mixed sentiment regarding BTC's short-term trajectory.

As the week concludes, @Paradigm has compiled its weekly derivative markets report. Notably, last week's trading activity was dominated by protective measures as traders acquired defensive structures or outright put options. Some significant trades included the purchase of 1200x 29-Sep-23 24000 / 13-Oct-23 24500 BTC Put Calendar, 1175x 24-Nov-23 23000 BTC Put, and 11000x 27-Oct-23 1700 ETH Put.

Crypto Technical Analysis

Moving on to technical analysis, BTC has significantly surged on the 4-hour chart, registering a gain of 3.6% in the last 24 hours. The RSI has also seen a notable increase, now in the overbought zone at 76.71. Consequently, the price has firmly broken through the resistance marked by the upper trendline formed by recent local lower highs from late last week onwards. If this bullish trend continues, BTC appears likely to test the resistance level at $28.9K, which previously served as a support level from late July to early August. Conversely, if bearish sentiment re-settles in, the previous support around the $25.5K level could hold.

Much like BTC, a similar surge for ETH has emerged in the last 24 hours, marked by a breakthrough toward the $1.74K resistance level, corresponding to the local high observed at the end of August. These patterns were first recognized late last week amidst a convergence of bullish indicators, including a positive cross over the SMA levels. The RSI is now also sitting in the overbought region at 69.83. On the downside, in the event of a bearish reversal, the immediate support for ETH is still at $1.54K, aligning with the local low.

Access institutional-grade commentary on TradFi × Crypto markets

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Treehouse Research 🌳