BTC

ETH

S&P Futures 500

$35,524.00

$1,983.00

$4,516.50

(-2.07%)

 (-2.57%)

(+2.02%)

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

GM Treehouser 🌳

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October 2023 Market Recap

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Our Daily View

What We Are Covering Today

  • Leading multinationals set to meet with President Xi in San Francisco; US set to intensify support for Taiwan’s defenses (More in Macro & TradFi)
  • OKX and Polygon will cooperate to launch ZK L2 network X1; Circle to enable cross-chain USDC transfers with Cosmos’ Noble (More in DeFi & CeFi)
  • Ethereum transaction fees hit $5.72, highest since July; Celsius moves 5,160 ETH, potentially eyeing liquidation amid market uptick (More in On-Chain)
  • BTC's IV dips in contango; Options skew indicates rising defensive posturing (More in Crypto Derivatives)
  • Both BTC and ETH see rapid declines and have swiftly moved towards their next respective support levels (More in Crypto Technical Analysis)

Macro & TradFi

Executives from leading multinationals such as Microsoft, Citigroup, and Exxon Mobil will meet with Chinese President Xi Jinping in San Francisco, highlighting a cautious but emerging thaw in US-China relations. This gathering, set against the backdrop of the Asia-Pacific Economic Cooperation meeting, signals a renewed interest among global corporations to reengage with the Chinese market amidst a challenging trade climate marked by technology restrictions and a push for local products in China. High-profile CEOs, including Microsoft's Satya Nadella and Exxon's Darren Woods, are seizing this opportunity to discuss potential business ventures and express concerns directly to President Xi, indicating a proactive stance in navigating the complexities of Sino-American trade relations. The focus on non-military sectors and the significant role of AI technology in these discussions reflect a broader strategic approach by businesses to adapt to the evolving geopolitical landscape, highlighting the intricate interplay between global politics and market dynamics.

In other news, the US's intensified efforts to bolster Taiwan's defenses against a possible Chinese attack have come into sharp focus. Wellington Koo, Taiwan's top national security official, disclosed that Washington's security cooperation with Taiwan spans comprehensive measures, including troop training and the build-up of asymmetric fighting capabilities. This revelation, ahead of President Joe Biden's summit with Chinese President Xi Jinping, could add tension to the already strained US-China relations. China's unyielding stance on Taiwan, viewing it as part of its territory, coupled with its growing military intimidation, places the Taiwan issue at the forefront of Sino-American relations. This situation is further complicated by the upcoming presidential elections in Taiwan and the US, with potential shifts in policy and increased pressure from China, especially if Taiwan’s Democratic Progressive Party, which China views as separatist, retains power.

In the last trading session, the S&P 500, NASDAQ Composite, and DJIA all gained 1.91%, 2.37%, and 1.43% respectively. In Asia, the Nikkei 225 and Hang Seng also rose 1.82% and 2.51% respectively. Global stocks soared on the back of growing optimism as October's Headline CPI data remained flat, while Core CPI climbed 4.0% YoY, below estimates of 4.1%, signaling a potential deceleration in inflation rates and fueling hopes for a cooling economic environment.

DeFi & CeFi

  • OKX and Polygon will cooperate to launch ZK L2 network X1
  • Circle to enable cross-chain USDC transfers with Cosmos’ Noble
  • ‘Mutant Ape Planet’ NFT developer pleaded guilty in $3M fraud
  • Cathie Woods speculates Gary Gensler’s political ambitions affecting spot BTC ETF judgment
  • Bitcoin Miner Hut Q3 net loss more than doubles as production slumps
  • Disney partners NBA Top Shot developer Dappler Labs for NFTs
  • FTX-linked wallets shift $13.5M in SOL
  • Crypto.com wins digital asset license in Dubai

Cryptocurrency exchange OKX is set to launch its own Layer 2 network, named "X1," leveraging Polygon's Chain Development Kit (CDK). Expected to be operational by Q1 2024, X1 will utilize Polygon's zero-knowledge technology. This move follows similar initiatives by major exchanges like Coinbase and Kraken, which are similarly exploring Layer 2 networks. Polygon Labs’ CEO Mark Boiron stated the deal doesn’t jeopardize Polygon’s potential collaboration with competitor exchange Kraken, as every collaborator wins by virtue of network interoperability. Through this venture, OKX and its engineers will become significant contributors to the development of Polygon's CDK. The network will integrate OKX's native token, OKB, to manage gas fees.

Meanwhile, Circle's Cross-Chain Transfer Protocol (CCTP), which enables cross-chain transfers of its stablecoin USDC without a bridge, is set to launch on Noble's primary network by the end of the month. Noble, an application-specific blockchain within the Cosmos ecosystem, will support CCTP-enabled chains, including Arbitrum, Base, Ethereum, and Optimism. This streamlines onboarding for platforms like dYdX, which recently launched its Cosmos-based ‘v4’ standalone chain. The CCTP is currently available on a Noble test network and will launch on mainnet on Nov 28.

On-Chain

According to @santiment reports a surge in Ethereum's transaction fees, which soared to $5.72 per transaction on Sunday — a peak not seen since the 4th of July. At present, fees have stabilized to an average of $3.95. This increase coincides with ETH’s price rebound above $2K, signaling a robust growth in network utilization. Furthermore, Wrapped ETH has emerged as a predominant factor in the allocation of these fees. The current fee dynamics underscore a sustained investor confidence in ETH and suggest a ripple effect of heightened network activity across other ERC-20 tokens.

On the other hand, @Lookonchain identified significant asset movements by Celsius, with a transfer of 5,160 ETH, equivalent to 10.63M, to FalconX. Moreover, Celsius has executed considerable other token transfers to various exchanges and FalconX just five days prior. This pattern suggests that Celsius may be positioning to liquidate some assets, potentially capitalizing on the recent uptick in market prices.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained relatively unchanged at 55.86% and 61.02%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC rose to 6.08% and 30-day 25-delta skew (C-P) ETH rose to 5.62%.
  • The futures market witnessed $301.44M liquidations in the last 24 hours, with longs representing 86.78% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

58.59%

SOL

OKX

dYdX

34.41%

XRP

OKX

dYdX

17.44%

ETH

OKX

Bybit

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 7-day implied volatility has remained relatively unchanged from 49.01% to 49.16% while the 30-day implied volatility has also decreased from 52.82% to 51.71%, suggesting a steadier outlook for the month ahead. This is possibly driven by headline CPI data, which has remained unchanged in September.

Meanwhile, BTC's term structure has maintained relatively unchanged in the contango state with IV falling slightly only across near-term expiries up to 45 days. This trend is likely attributed to an absence of significant, forthcoming BTC-centric events that could inject further fluctuations into the market.

The recent shift in Bitcoin's options market reveals a nuanced sentiment among traders; the 25-delta 7-day skew surged to 7.23% from 4.80%, reflecting a stronger short-term bullish conviction. Concurrently, the modest decline in the 30-day skew to 6.08% from 8.80% suggests a growing propensity for defensive strategies over the monthly horizon. These movements underscore a market bracing for potential upside in the immediate term while adopting a more cautious stance in the slightly medium-term future.

Lastly, @Paradigm highlights varied BTC options activities: A 1614 call spread for Nov 17, 2023, at 37K/38.5K was purchased, suggesting a bullish outlook. Another bullish sign is the buying of a 475 call calendar, spanning Dec 29, 2023, to Jan 26, 2024, at 38K/40K. In the ETH sector, Paradigm notes a mix of caution and optimism: a 10K put for Nov 24, 2023, at 1.9K was acquired, indicating a protective stance. Additionally, a bullish sentiment is evident from the purchase of a 4000 call calendar for Dec 29, 2023, to Jan 26, 2024, at 2K.

Crypto Technical Analysis

Turning to technical analysis, the preceding bearish analysis has unfolded as BTC rapidly descended within the range of the rising channel. Currently, the price hovers around the lower boundary of the channel as the selling pressure decelerates. This support level is further reinforced by the 100-period SMA. RSI has briefly breached the oversold threshold and currently rests at 32.21. Should this level prove unsustainable, BTC may decline towards the $31.6K level, a resistance-turned-support last observed in July. However, if the bulls regain control of the market, the price is likely to rebound from this level and gradually approach the upper boundary of the channel at $36.8K.

ETH, on the other hand, is undergoing similar movements, having also witnessed a significant decline in the last 24 hours. Currently, ETH appears to have found support at $1.97K, coinciding with the lower trendline observed at the beginning of the month. If this level fails to hold, the next immediate support lies at $1.93K, representing a long-term resistance-turned-support zone since April. Conversely, ETH might attempt a third test of the $2.12K resistance if it rebounds from the current level.

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