BTC

ETH

S&P Futures 500

$66,245.64

$3,838.14

$5,102.25

(+4.22%)

 (+7.47%)

(+0.34%)

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 wary of adjusting interest rates; NYCB announces plan to raise over $1B (More in Macro & TradFi)
  • Wormhole launches W token for DAO governance; Hut 8 closes Alberta mining site (More in DeFi & CeFi)
  • ZachXBT warns of tainted ERROR project funds; $PEPE trade nets $5.66M profit (More in On-Chain)
  • BTC shows stability in IV and C-P skews while ETH’s term structure proceeds into a more backwardation state (More in Crypto Derivatives)
  • BTC looks to test ATH soon; ETH continues to rally past $3.6K resistance (More in Crypto Technical Analysis)

Macro & TradFi

Federal Reserve Chair Jerome Powell emphasized the central bank's cautious stance on adjusting interest rates during his Capitol Hill testimonies, stressing that a reduction in the target range for the policy rate is not anticipated until there is greater confidence in inflation sustainably moving towards the 2% target. Despite noting the economy's considerable progress toward the Fed's objectives and a substantial easing of inflation, Powell highlighted the importance of carefully assessing incoming data and the evolving outlook before making any policy adjustments. This reiteration of a careful and data-driven approach to policy adjustments underscores the Fed's commitment to not easing up prematurely in the fight against inflation, despite market expectations of rate cuts later in the year.

In other news, New York Community Bank (NYCB) has announced a deal to raise over $1 billion, spearheaded by Steven Mnuchin's investment firm, in a strategic move to bolster its financial standing and alleviate recent concerns. This capital injection is accompanied by significant leadership changes, including appointing Joseph Otting, a former Comptroller of the Currency, as the new CEO, and Steven Mnuchin joining the board. Despite NYCB shares initially plummeting by more than 40%, news of the investment reversed the decline, showcasing investor confidence in the bank's recovery plan. The fundraising involves selling common and convertible preferred stock and warrants for additional shares to a group of investors, including Hudson Bay Capital, Reverence Capital Partners, and Citadel, pending regulatory approvals. This initiative marks a significant effort to stabilize NYCB after its shares faced severe pressure following a surprising financial loss report and Moody's downgrading its credit rating to junk status.

The S&P 500 increased by 0.51%, the Dow Jones Industrial Average by 0.20% and the Nasdaq by 0.58% due to speculation of a potential interest rate cut this year. Labor market data revealed a slight underperformance in U.S. private payrolls increase for February, while job openings showed a marginal decline in January, hinting at a gradually easing labor market. A majority of the S&P 500's 11 major sectors saw gains, led predominantly by utilities and information technology, which climbed nearly 1% and 0.9% respectively. The semiconductor industry made a notable rebound, with the Philadelphia Semiconductor Index surging 2.4%, marking its fourth record close in five sessions. However, Tesla's shares took a 2.3% hit, continuing a three-day loss streak, amid analysts' concerns over weakening electric vehicle demand and potential risks to first-quarter earnings.

CeFi & DeFi

  • Wormhole to airdrop 617M W tokens to past users
  • Hut 8 closes Bitcoin mining site, citing surging energy costs
  • Early miners contribute to selling pressure
  • Fetch.ai to allocate $100M for Infrastructure Program and Reward $FET Stakers
  • SEC uses insider trading judgment to enhance case against Coinbase, Binance

Wormhole, a prominent cross-chain bridging service, has officially announced its intention to launch a new token $W. It is allocating 617 million tokens—equivalent to 6% of its total supply—to its past users. This initiative is part of the project's move towards decentralized governance, with the W token serving as a governance asset in the forthcoming Wormhole Decentralized Autonomous Organization (DAO). The DAO will play a pivotal role in decision-making processes for the platform, including fee structures. The W token is designed to enhance interoperability across various blockchains, including Solana, Ethereum, and Aptos, among others, with its native launch on Solana and Ethereum. This strategic move, akin to that of the Pyth project, not only reinforces Wormhole's commitment to decentralization but also signifies a significant step towards enhancing cross-chain communication and governance within the blockchain ecosystem. The airdrop's announcement follows Wormhole's separation from Jump Capital and a successful $225 million fundraising, positioning the platform and its backers for substantial influence in the evolving blockchain landscape.

Elsewhere, ​​Hut 8, a key player in the Bitcoin mining sector, has announced the closure of its Drumheller, Alberta, Canada site, attributing the decision to escalating energy costs and operational challenges. The site, responsible for producing an annualized rate of 48 Bitcoins, or 1.4% of Hut 8's total Bitcoin production at the expense of about 11% of its hash rate, will cease operations immediately. CEO Asher Genoot highlighted that the profitability of the Drumheller facility has been significantly undermined by rising energy expenses and voltage issues. In response, Hut 8 will relocate its Bitcoin miners to its Medicine Hat facility, though it will retain the Drumheller lease for potential future use if market conditions become favorable. Hut 8’s closure comes against a backdrop of surging electricity prices in Alberta, up by 1,000% since 2017, and a sector-wide stagnation exacerbated by record mining difficulty, the impending Bitcoin halving, and government restrictions on new cryptocurrency mining projects due to energy consumption concerns.

On-Chain

On-chain investigator ZachXBT has issued a warning regarding the error project by @serpent, revealing that its deployer was financed with Ethereum (ETH) originating from a $1.3 million meme coin scam known as FCKIT by Eskyy. Detailed blockchain analysis shows that on March 5, 2024, a total of 50 ETH from the FCKIT presale scam was transferred to a Stake wallet at 10:46 PM UTC, followed by two withdrawals to the ERROR deployer: 14.4 ETH at 10:49 PM UTC and 35.7 ETH at 11:01 PM UTC. This connection raises serious concerns about the legitimacy and ethical foundation of the ERROR project, urging potential investors and users to exercise caution when interacting with it.

In other on-chain news, SpotOnChain reported that five wallets, likely to be controlled by a single entity, have capitalized on the recent surge in the $PEPE token's value, securing a staggering profit of $5.66 million, a 475% increase, at the token's new all-time high approximately 8 hours ago. Initially, these wallets withdrew 969.96 billion $PEPE from Binance on January 16, 2024, when the holdings were valued at merely $1.19 million. Remarkably, just 49 days later, the entire quantity of $PEPE was sold for 6.847 million USDT, culminating in a substantial profit.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC declined to 74.04% while that of ETH stayed relatively constant at 78.6%.
  • The 30-day 25-delta skew (C-P) for BTC and ETH declined to 5.71% and 4.94%, respectively.
  • The futures market witnessed $343.86M in liquidations, with longs representing 53.62%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

75.29%

DOGE

Bybit

dYdX

71.35%

DOGE

Binance

dYdX

59.94%

DOGE

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.

BTC ATM Implied Volatility (IV) remained relatively stable as the cryptocurrency maintained its position around the $66K range. Presently, the 30-day IV stands at 71.15%, with the 7-day IV slightly higher at 73.92%.

BTC's term structure is gradually normalizing, with the backwardation easing slightly. The IVs for short-dated contracts have seen moderate declines, from 79.28 to 72.55 for 1-day contracts and from 76.91 to 75.54 for 2-day contracts. In contrast, ETH has experienced a more pronounced backwardation in its term structure, with IVs increasing for all contracts up to 204-day expiries. This change suggests a growing interest among traders in ETH, likely influenced by its recent price movements.

The BTC 25 Delta skews (C-P) have remained unchanged, signaling stability in investor sentiments for the near future. This indicates that the market currently lacks immediate catalysts, which could stimulate another wave of interest in BTC, regardless of direction.

Lastly, during the US Trading Session, @Paradigm reported that option investors are proceeding cautiously due to recent price movements. The flows indicated mixed sentiments on both BTC and ETH, reflecting uncertainty about future price directions. Some notable trades included the purchase of a 387x 29-Mar-24 $65K/$60K BTC Put Spread, the sale of a 375x 29-Mar-24 $70K BTC Call, the purchase of a 4,533x 29-Mar-24 $3.7K/$3.4K ETH Put Spread, and the sale of a 4,500x 29-Mar-24 $4.5K/26-Apr-24 $5K ETH Call Calendar.

Crypto Technical Analysis

Moving on, BTC’s 4H chart shows that it is currently trading at approximately $65.9K following a slight decline in the past day and seems to be starting to consolidate before another price discovery. BTC’s immediate support lies around $61K while its long-term support lies at approximately $52K. The current RSI value is around 54.87, a 21% gain from yesterday. This is still below the overbought territory which highlights the room for upward growth and bullish momentum. BTC’s price action in the next few days will be pivotal as we could potentially see another test of an all-time high at $69K.

From ETH's 1D chart, there is a continued uptrend as ETH broke past the previous resistance of $3.6K. ETH currently trades at approximately $3.82K and is approaching the next resistance level of $4.2K, ETH is currently trading at 23% off its previous all-time high of $4.7K. The previous resistance turned support level lies at $2.7K. For ETH’s RSI, we see that it is currently trading at 83.42, significantly in the overbought zone, which could suggest that the market should be prepared for potential price volatility as well as a correction.

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