BTC

ETH

S&P 500 Futures

$63,528.75

$2,620.00

$5,813.25

(-2.94%)

 (-1.04%)

(+0.31%)

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

GM 🌳

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September 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • Jerome Powell signals cautious Fed rate cuts amid U.S. recovery; Xi Jinping warns of challenges despite China's stimulus efforts (More in Macro & TradFi)
  • Eigenlayer unlock approaches; Coinbase to add proof of reserve to cbBTC (More in DeFi & CeFi)
  • Mt Gox repayments through Kraken were mostly withdrawn to self-custody; BTC active wallets trending towards 2018 low (More in On-Chain)
  • BTC ATM IVs signal short-term uncertainty; call-put skew remains stable, indicating neutral sentiment (More in Crypto Derivatives)
  • Both BTC and ETH declined further with ETH looking at a potential rebound from the lower trendline (More in Crypto Technical Analysis)

Macro & TradFi

Federal Reserve Chair Jerome Powell indicated that the central bank is likely to revert to quarter-point rate cuts in November, provided economic data remains strong. Following a larger half-point cut earlier this month, Powell expressed confidence in the U.S. economy, emphasizing that the Fed is not in a rush to lower rates quickly. The focus is on achieving a neutral monetary policy stance while preserving a robust labor market. Powell noted that inflation is receding, allowing the Fed to prioritize labor market stability as it cautiously proceeds with rate adjustments. Future decisions will depend on overall economic conditions, with policymakers expecting gradual rate reductions through 2025.

Meanwhile, in his first public comments following the announcement of an unprecedented stimulus package, President Xi Jinping expressed caution about potential challenges facing China's economy. Speaking at the 75th anniversary celebration of the founding of the People’s Republic of China, Xi urged preparedness for "obstacles and difficulties" ahead, without providing new details on the economic measures. These measures include interest rate cuts and support for the housing and stock markets, aimed at countering China's economic slowdown driven by a prolonged property slump, weak domestic demand, and falling prices. Despite the stimulus package sparking a major rally in Chinese equities, consumer confidence remains low, and industrial activity contracted for a fifth consecutive month in September.

Lastly, on Monday, U.S. stock indexes advanced, with the S&P 500 and Dow Jones Industrial Average closing at record highs, as the market wrapped up a strong month and quarter. The S&P 500 and Nasdaq Composite each gained 0.4%, while the Dow rose 0.04%. For the quarter, the S&P 500 was up 5.5%, and year-to-date, it has surged 21%, marking its best start to a year in over two decades. Key events that investors will be looking out for would be the US September ADP employment data on 2 October, the September unemployment rate, and seasonally adjusted non-farm payrolls on 4 October.

DeFi & CeFi

  • EigenLayer’s token unlock approaches with the market predicting a $6.8B FDV
  • Coinbase to add proof of reserves to Bitcoin wrapper cbBTC
  • Kasikornbank launches the first licensed Thai digital asset custodian 
  • Australian bank joins Project Guardian to explore RWA tokenization
  • Crypto exchange Gemini to close all customer accounts in Canada

EigenLayer's native token, EIGEN, is set to unlock at 13:00 SGT on October 1 and will begin trading on exchanges like Binance shortly thereafter. Since its launch in May, EIGEN has been non-transferable, but derivatives markets are suggesting a bullish debut with a projected spot price of around $4 per token based on perpetual futures data from exchanges like Aevo and Hyperliquid. The token has a total supply of 1.6B, leading to a fully diluted valuation (FDV) projected to exceed $6.7B, with about 200M EIGEN tokens currently in circulation. Trading volumes have increased recently, with prices rising from lows of approximately $2 in early September to around $3.50 by late September. As more protocols begin compensating EigenLayer's restakers—who use EIGEN as collateral for securing other networks—token holders are poised to benefit from the increasing utility of the token.

In other news, Coinbase is set to enhance transparency by adding verifiable proof of reserves (PoR) to its newly launched Bitcoin wrapper, Coinbase Wrapped BTC (cbBTC), as confirmed by a spokesperson on September 30. This move aims to address concerns regarding Coinbase’s transparency, especially in comparison to rival Bitcoin wrappers like Wrapped Bitcoin (WBTC) and 21.co Wrapped Bitcoin (21BTC). The decision follows criticism aimed at Coinbase for lagging behind competitors in transparency, particularly amid unfounded rumors about issuing unbacked Bitcoin IOUs to BlackRock, a crypto ETF sponsor. Launched on September 12, cbBTC has quickly gained traction, amassing around $250M in total value locked (TVL). In addition to its commitment to reimburse holders for losses due to cybersecurity exploits, cbBTC is under the supervision of New York’s Department of Financial Services. Initially available on Ethereum and Coinbase layer-2 network, Base, cbBTC is also set to launch on Solana soon.

On-Chain

According to an analysis by @_Checkmatey_, approximately 48,000 BTC were transferred to Kraken in July for the distributions of the Mt. Gox repayments. However, over 40,000 BTC have been withdrawn from the exchange since then. This indicates that the majority of recipients are not selling their BTC; instead, they intend to hold it for the long term in self-custody. This reflects a ratio of 16% sold to 84% held, and a strong confidence in BTC’s future potential.

In an analysis by CryptoQuant, the number of active BTC addresses has been in steady decline since March of this year, despite the continuous growth in BTC's price. This decline is the largest observed since 2021 and appears to be trending toward 650,000 addresses, a level last seen during the 2018 bear market. This divergence between price and fundamental metrics raises concerns, prompting traders to monitor any potential movements in BTC's price that may align with these underlying fundamentals.

Derivatives

  • Funding rates for both BTC and ETH remained positive. 
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained flat at 54.45% and 62.20% respectively.
  • The 30-day 25-delta skew (C-P) for BTC rose to 0.95 while ETH remained flat at -0.19.
  • The futures market witnessed $226.64M in liquidations in the last 24 hours, with longs representing 80.14%.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

14.68%

AVAX

OKX

dYdX

13.71%

AVAX

Binance

dYdX

10.89%

AVAX

Binance

OKX

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 IVs have remained flat, with the 7-day IV diverging sharply from the 30-day IV. This spike is likely driven by anticipation of the upcoming US jobs market data, which could stoke recession fears if weak or raise concerns that the Fed may not ease rates as aggressively as expected. The divergence signals heightened uncertainty in the near term as traders adjust for potential macroeconomic impacts on BTC's price in the short term.

BTC's term structure remains in contango, showing little variation across the curve. This indicates that traders anticipate increased short-term volatility but maintain confidence in long-term price stability. The contango pattern suggests the market expects any near-term fluctuations to settle, reflecting a relatively stable long-term outlook for BTC despite temporary disruptions.

The call-put skew has remained stable, with the 30-day skew at 0.95 and the 7-day skew at 0.13, which suggests that there is little difference in demand between calls and puts across both time horizons, indicating a neutral market sentiment and no strong directional bias in the short or medium term.

Lastly, @Paradigm highlighted a trading session where the overall sentiment appears slightly mixed but leans bearish due to the presence of downside-focused strategies. Key BTC trades included the acquisition of 562x 25-Oct-24 $60K/$70K Bear Risk Reversal and 400x 4-Oct-24 $67K Calls. In addition, notable ETH structures saw the sale of 2250x 25-Oct-24 $3.2K Calls and 1000x 25-Oct-24 $3.3K/$3.6K Call Spreads.

Crypto Technical Analysis

In technical analysis, Bitcoin has experienced another sharp decline over the past day, pulling back below the $64K support after breaching the previously identified lower trendline. Currently, the price is slightly above the 100-period SMA. If the price continues to trend lower, the next key support is notably near the $55K zone, representing a potential 14% downside from the current level. Conversely, if bulls regain control of the market, the price may re-test the resistance at $64K in the near term.

On the other hand, while ETH has also experienced a decline, the technical indicators appear slightly more optimistic. Overall, the price remains above the previously identified lower trendline, despite a momentary break below it. Therefore, it’s important to monitor the token's future direction. If the price reverses upward, ETH may retest the resistance level at $2.68K. Conversely, if the price continues to decline, ETH could drop to the next support at $2.45K.

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