BTC

ETH

S&P Futures 500

$67,077.00

$3,457.71

$5,205.25

(-0.22%)

 (-3.28%)

(+0.37%)

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

GM Treehouser 🌳

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February 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • Federal Reserve hikes squeeze household income; Nvidia launches advanced Blackwell GPUs, boosting AI dominance (More in Macro & TradFi)
  • Fidelity includes liquid staking in ETH ETF proposal; OKX delists USDT pairs in anticipation of regulatory changes (More in DeFi & CeFi)
  • $SLERF gathers immense attention from SOL whales; Short-term SOPR indicates that the recent bull run may be nearing an end (More in On-Chain)
  • BTC IVs point towards a cautious market; Almost $200M worth of longs liquidated (More in Crypto Derivatives)
  • BTC tests key $66K support; ETH approaches the crucial $3.4K support level (More in Crypto Technical Analysis)

Macro & TradFi

The Federal Reserve's recent interest rate hikes have led to an unusual financial squeeze on American households, diverging from previous patterns where rate increases typically boosted household interest income. Instead, the cost of servicing debt, including mortgages and credit cards, has risen by about $420 billion since March 2022, outpacing the $280 billion increase in interest income. This marked the first time in fifty years that a Fed tightening cycle resulted in a net decline in household interest income. Contributing factors include a higher proportion of consumer credit with variable rates, banks' reluctance to offer higher rates on deposits, and a shift from interest-bearing savings to equities. Moreover, these changes disproportionately affect lower-income households who face higher debt costs, further exacerbating economic inequality and potentially dampening consumer spending, as those most financially strained are often the key drivers of economic activity through their consumption.

Elsewhere, Nvidia has introduced its latest artificial intelligence chips, Blackwell GPUs, marking a significant leap in computing power over its previous models. This move aims to bolster its dominance in the AI sector. During Nvidia's annual developer conference, CEO Jensen Huang highlighted that the Blackwell GPUs, featuring 208 billion transistors—more than double that of its predecessor, the H100—offer unparalleled performance in AI model training and inference processes. This advancement is set to cater to the increasing computational demands of large language models like ChatGPT. Furthermore, the introduction of the GB200 "superchip," which integrates two Blackwell GPUs with Nvidia's "Grace" CPU, is poised to significantly impact generative AI development, emphasizing Nvidia's pivotal role in driving the AI revolution forward. This move reinforces Nvidia's market leadership and addresses industry concerns over the sustainability of demand for its chips amidst emerging competition and shifts in market dynamics toward AI inference. By expanding its software ecosystem with the new "NIM microservices" for optimized AI model deployment, Nvidia aims to solidify its position as the primary AI chip supplier, mirroring the function of a foundry in the AI space.

Yesterday, the U.S. stock market showed positive momentum, especially within the tech sector, as investors adjusted their positions ahead of several central bank decisions, spanning from the U.S. to Japan. The S&P 500 index recorded a gain of 0.63%, and the Nasdaq Composite index notably outperformed with a 0.99% increase, fueled by significant gains in tech shares. Contrary to the earlier note, the Dow Jones Industrial Average experienced an uptick, increasing by 0.20%. Significant stock movements included Alphabet, which surged by 4.60% amid reports that Apple is considering integrating Google's Gemini into the iPhone. Investors are now keenly awaiting the Federal Open Market Committee's (FOMC) interest rate decision, which is set to be announced on Thursday, 21 March, at 02:00 SGT, with Chairman Powell's press conference slated for 02:30 SGT.

CeFi & DeFi

  • Fidelity includes liquid staking in its ETH ETF proposal
  • OKX delists USDT pairs in the European Economic Area
  • Standard Chartered raises year-end BTC forecast to $150K
  • Solana TVL flips BSC for the first time
  • Ether.Fi’s token falls 20% post-launch

Fidelity Investments is seeking to enhance its proposed Ethereum ETF by enabling liquid staking, as detailed in a recent amendment to its SEC filing. The move could allow investors in the Fidelity Ethereum Fund to earn returns through staking, adding a layer of utility and yield to the traditional ETF structure. Lido, an Ethereum staking protocol, saw a 9% price increase following the announcement, indicating market optimism around the integration of staking in mainstream investment products. Fidelity's ETF proposal joins a list of other hopefuls from major firms like BlackRock and Ark Invest, all vying for SEC approval, which remains uncertain with the next decision deadline slated for May 23.

OKX has announced the discontinuation of USDT trading pairs for users in the European Economic Area (EEA), in anticipation of the upcoming regulatory changes by the European Union (EU). The move, disclosed by an OKX spokesperson to The Block, aligns with the EU's Markets in Crypto-Assets (MiCA) regulation set to take effect on December 30, 2024, which will impose limitations on the usage of certain stablecoins. OKX stated that the removal of USDT pairs is part of their efforts to introduce [Euro] on-ramps for EEA-based customers, emphasizing that this change impacts only a limited portion of their clientele. Moreover, OKX has broadened its services in the EEA with the launch of new Euro fiat onramps and trading pairs. This move by OKX could serve as a bellwether for other platforms that will have to balance global operations with regional compliance, especially in an evolving and increasingly stringent regulatory climate for digital assets.

On-Chain

According to an analysis on @lookonchain, a SOL whale wallet address starting with 2NMV has allocated over $600K to purchase $SLERF, utilizing the $32M worth of SOL holdings in the wallet. $SLERF has garnered considerable attention in crypto after its founder accidentally burned the LP and the 500M $SLERF tokens intended for pre-sale airdrops. Following this incident, several major centralized exchanges (CEXs), including HTX, Gate.io, and Bybit, have announced the integration of $SLERF for trading, further amplifying its exposure in the market. With an average entry price of $0.35 per $SLERF token, this marks the whale's first token purchase with this wallet address, underscoring the significance of $SLERF within the memecoin community.

Meanwhile, another analysis on @cryptoquant reveals that nearly 50% of Bitcoin's Realized Cap is now owned by short-term holders, indicating a significant increase in enthusiasm and accumulation among new investors following the recent price surge. Despite a notable decrease in Bitcoin's price since last Friday, the dominance of short-term capital in the market has remained strong, suggesting a persistent bullish sentiment among investors. It is imperative to closely monitor the behavior of short-term holders and the potential impact of their movements on the Bitcoin market in the days ahead.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH decreased to 74.02% and 74.90%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH decreased to -0.10% and -4.68%, respectively.
  • The futures market witnessed $272.23M in liquidations, with longs representing 72.10%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

65.17%

AVAX

Bybit

dYdX

59.38%

AVAX

OKX

dYdX

47.33%

AVAX

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.

Bitcoin's 7-day and 30-day ATM Implied Volatility (IV) both decreased from yesterday, currently at 71.34% and 71.55% respectively. The convergence of both short-term and mid-term IVs points toward confluence regarding volatility. This is possibly the market’s reaction toward BTC’s flash crash following its all-time high last week. It indicates that the market has absorbed the news and is continuing to adjust while waiting for clearer indications of BTC’s stability.

The term structure continues to show a contango shape. The steep drop in the Mark IV from the short end indicates a sudden decrease in short-term volatility expectations followed by a market consensus that aligns with the typical higher volatility in the long term.

BTC’s 25 Delta skews (C-P) for both the 7-day and 30-day maturities show a downward trend after the pronounced spikes seen last week, reflecting a market that is still recovering. The 7-day maturity skew remains lower than the 30-day, suggesting that there were more purchases of 7-day puts than those for 30 days. Moreover, the divergence between the short and medium-term skews points to an expectation of potential further adjustments or market realignments as the market stabilizes. 

Lastly, during the Americas Trading Session, @Paradigm reported significant BTC options trades that included a 325x Call Spread for 28-Jun-24 with strikes at $60K/$70K, a 300x Call for 28-Jun-24 at $100K, and a 250x Put for 26-Apr-24 at $54K, a 250x Straddle for 26-Apr-24 at  $65K, alongside a 100x Call Calendar sold for the dates 29-Mar-24 and 26-Apr-24 at $75K. For ETH, there was a purchase of an 8,000x Call for 22-Mar-24 at $3.9K, a 2000x Put for 26-Apr-24 at $3.5K, a 2,000x Call Calendar for 29-Mar-24 and 26-Apr-24 with strikes at $3.5K and $4.3K, a 2,000x Call for 29-Mar-24 at $4K and a 2,000x Custom Put for 29-Mar-24 with strikes at $2.9K and $3.4K.

Crypto Technical Analysis

In technical analysis, BTC exhibits a retraction on the 4-hour chart from the recent uptick, now probing the support level around $66K. This particular price point previously presented resistance on March 6th, emphasizing its significance as a pivot in BTC's price dynamics. Currently, the support threshold is being tested; if it fails to hold, the subsequent support region lies at the $60K level, implying a potential 9% decline from the current price. Conversely, should Bitcoin overcome this period of consolidation and move upwards, resistance is established at the $72K to $73K level. Monitoring the Relative Strength Index (RSI) shows a reading of approximately 40, which suggests a neutral momentum but leans towards being oversold. This indicates the potential for either price stabilization around the current support or further descent if bearish pressures persist.

Moving to ETH, its price is observed to be retracing towards its pivotal support level at $3.4K, mirroring Bitcoin's current price movement. This level has proven to be a challenging resistance on March 3rd, and its retest as support could be critical for ETH's short-term price trajectory. Should Ethereum break below this support, there's a possible descent to the next substantial support around $3K, denoting a roughly 12% decline from the level it is testing. On the flip side, should Ethereum rebound, we may encounter resistance at $4K. The RSI is hovering around 37, suggesting a bearish momentum is at play. However, it is edging closer to the oversold territory, which sometimes precedes a reversal or a temporary halt in downward price action.

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