BTC

ETH

S&P Futures 500

$30,413.78

$1,889.15

$4,396.00

(-1.38%)

 (+0.67%)

(-0.56%)

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

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

  • Putin confronts unprecedented challenge to maintain power over Russia; Market impact remains to be seen following Russia’s turmoil (more in Macro & TradFi)
  • FTX's ongoing restructuring generates interest; Gemini expands operations in Singapore (more in DeFi & CeFi)
  • Profitable BTC Short-Term Holder accounts for 96.9% of the addresses; “Smart Whale” wallet deposited $16M in USDC to Binance (more in On-Chain)
  • IV term structure indicates falling IV for BTC but rising IV for ETH; greater flow into bullish structures for BTC and ETH (more in Crypto Derivatives)
  • Bitcoin asserts market leadership as Bitcoin Dominance soars (more in Crypto Technical Analysis)

Yevgeny Prigozhin, the leader of Russia's private militia known as the Wagner Group, initiated a mutiny over the weekend that posed a significant threat to Vladimir Putin's longstanding rule over Russia. As his forces advanced towards Moscow, the situation intensified over the weekend. Founded by Prigozhin in 2014, the Wagner Group consisted of approximately 50,000 mercenaries, including ex-prisoners, who had been engaged in conflicts in Ukraine, the Middle East, and Africa. However, as the event unfolded, Prigozhin called off the mutiny, withdrawing his heavily armed mercenaries from the southern city of Rostov after reaching an agreement with Putin. Despite the de-escalation, the impact on global stock markets remained uncertain, leaving investors anxious about potential market reactions and prompting some to seek safe-haven assets such as US government bonds and the dollar.

The U.S. stock market ended last week on a downward note, with all three major indices experiencing losses of various magnitudes. Specifically, the Dow Jones Industrial Average experienced a decline of 0.65%, followed by a decrease of 0.77% in the S&P 500. The tech-focused Nasdaq Composite index, however, was impacted the most with a significant drop of 1.01%. This broad sell-off was mainly driven by the negative performance of megacap stocks sensitive to interest rates, with Microsoft Corp, Tesla Inc, and Nvidia Corp leading the decline. Oil prices experienced a significant surge in early Asian trade on Monday as concerns over the stability of a major oil producer arose after a failed mutiny by Russian mercenaries. Brent crude futures climbed by 1.3%, reaching $74.80 per barrel, while U.S. West Texas Intermediate (WTI) crude saw a similar increase of 1.3%, reaching $70.04 per barrel.

Macro & TradFi

DeFi & CeFi

  • John Ray III spearheads FTX's restructuring, attracting major financial institutions
  • Gemini plans to have over 100 employees stationed in Singapore a year from now
  • Hedera network releases ChatGPT Plugin
  • Japan's tax policy now exempts token issuers from taxes on unrealized gains
  • Celsius creditors allege Wintermute facilitated ‘wash trading’
  • Layer2 Network Optimism Rebrands as OP Mainnet
  • Starknet Foundation appoints first CEO, Former Meta executive Diego Oliva

The restructuring of cryptocurrency exchange FTX, led by CEO John Ray III, continues to generate interest, with industry giants such as Nasdaq, Ripple Labs, BlackRock, and Robinhood expressing potential investment intentions, as revealed in the '363 Sales Parties' of the U.S. Bankruptcy Code. This news coincides with Ray's first public remarks since assuming control of FTX last November, where he indicated the formation of a task force to explore the feasibility of reviving FTX.com, the company's principal global exchange. Despite accusations of illegal activity by senior FTX officials, Ray noted the client's appreciation for FTX's advanced technology, implying a potential value in the platform's reboot. The broad interest and Ray's optimistic outlook have positively influenced market sentiment, evident in the 10% value increase of the FTX token (FTT) post-announcement. FTX aims to further solidify its recovery plans in the second half of 2023, which includes the selection of a 'stalking-horse bidder' among these interested parties.

In other news, Gemini is set to expand its operations in Singapore, an indication of the Asia-Pacific region's increasing relevance to the crypto industry. In the next year, the company plans to boost its Singapore headcount to over 100, laying the foundation for broader operations in the region. This strategic move, backed by the appointment of Pravijt Tiwana as APAC CEO, is further complemented by a new engineering center in India. This expansion into the APAC region highlights Gemini's commitment to its international business growth amid a dynamic cryptocurrency landscape in Singapore.

On-Chain

BTC witnesses substantial recovery, surpassing $30K this month. According to Glassnode's on-chain data, this surge has rendered over 1.8 million Short-Term Holder (STH) coins profitable, representing 96.9% of BTC in this category. This optimistic signal indicates potential capital inflow as traders gain confidence amid the price recovery and retest of critical resistance levels. Furthermore, positive market fundamentals, including BlackRock's spot Bitcoin ETF application and Tether's involvement in Bitcoin mining, bolster the prevailing positive sentiment and bullish outlook for Bitcoin in the medium to long term.

In addition, blockchain-tracking firm Lookonchain reported an unidentified whale wallet has deposited $16M worth of USDC into Binance. This particular wallet has gained recognition for its strategic trading activities, including selling ETH at its local peak of $1.93K, exchanging USDC for ETH prior to its de-pegging in March, and withdrawing funds from FTX just before the exchange suspended withdrawals. Large deposits to exchanges of this nature often indicate potential market moves or strategic positioning by experienced traders.

Crypto Derivatives

  • BTC and ETH funding rates remain positive
  • 30-day BTC ATM IV fell to 45.36% while ETH ATM IV slightly rose to 43.48%
  • Deribit Implied Volatility Index (DVOL) is 49.46% and 48.45% for BTC and ETH respectively
  • 30-day 25-delta skew (C-P) for ETH and BTC is at 2.06% and 2.29% respectively

Top 3 CEX USDT perp funding rate arbitrage based on last 24-hour lookback:

Net Annualized APR

Perp (USDT pair)

Long on

Short On

18.78%

DOGE

dYdX

OKX

12.12%

ETH

Bybit

dYdX

10.46%

SOL

OKX

dYdX

Source: @CexyArbBot Telegram

1) Pairs observed include BTC, ETH, SOL, BNB, XRP, LTC, DOGE vs USDT perps 

2) CEX observed include Binance, Bybit, OKX & DYDX

@CexyArbBot allows you to customize CEX, 100+ pairs & lookback periods combo

Over the weekend, the futures market witnessed liquidations totaling $283.52M, with long positions comprising 51.4% of the overall liquidated positions.

The BTC ATM IV term structure has exhibited significant changes over the weekend, particularly at the front of the curve. IV levels decreased across the board: IV for near-dated options saw a notable decline of over 10%, IV in the 30-180 DTE range declined 1%, while longer-dated tenors remained relatively stable. Similarly, for ETH, IV for options expiring within a week declined sharply. In contrast to the BTC term structure, the ETH curve displayed an increase in IV beyond the 30-day expiry, reflecting the larger price swings observed in ETH over the weekend.

The BTC 25-delta skew displayed a call premium across all maturities, with the 7-day skew measuring 2.53%. However, there was an exception on Saturday when the skew briefly turned negative. In the case of ETH, the 25-delta skew remained relatively stable over the weekend, indicating a call premium with the 7-day skew at 1.67%. These observations suggest a growing investor sentiment aimed at capturing potential substantial upside movements in the market.

Over the weekend, the volatility risk premium (VRP) for BTC and ETH dipped into negative territory, with values of -2.44% and -1.14% respectively. This indicates that the 7-day realized volatility (RV) exceeded the 7-day IV that the market had anticipated.

Moving onto notable trade structures recorded by @tradeparadigm, the majority of the trade flows were directed at capturing upside movement in BTC and ETH. For BTC, major trades have been the purchase of 1,200x 30 Jun $30K calls and the purchase of 500x 28 Jul $28K / $32K bull risk reversals. For ETH, the trades indicate mixed views on future volatility, with the purchase of 13,000x 28 Jul $1.9K and 6,350x 30 Jun $2K calls, while 6,889x 30 Jun $1.9K straddles were sold.

The VIX rose slightly to 13.44.

Crypto Technical Analysis

Despite low trading activity, BTC has demonstrated resilience by maintaining the $30K level over the weekend. Additionally, the formation of higher lows around $25K over the past week confirms an overall upward trend in BTC. The market has experienced a three-month period of consolidation since mid-March, which has created a significant demand zone. The recent bullish impulse towards the psychological resistance level of $30K triggered by the news of Blackrock ETF filing, suggests that pullbacks into the consolidation range may present favorable entry opportunities for those who missed the positive price action. BTC currently rests between $30-31K, which is considered healthy given the substantial price increase from $25K to $30K. Moving forward, it is anticipated that BTC may establish higher highs on the daily timeframe, with a target towards $33K.

Despite positive news and developments surrounding BTC, ETH has faced challenges in breaking out of a horizontal channel between $1.79K and $1.94K. The $1.94K level has served as a significant resistance since mid-March, and ETH is currently making efforts to overcome this overhead barrier. Encouragingly, higher lows have formed around the $1.62K level, indicating a positive signal. ETH will likely continue trading within the range of $1.79K to $1.94K until a confirmed breakout is achieved.

Bitcoin Dominance (BTC.D) has successfully broken out above the 49% level, which measures the market capitalization of BTC relative to the total cryptocurrency market capitalization. This breakout is fueled by the liquidity and flows stemming from the Bitcoin ETF filing, making BTC an appealing trade in comparison to altcoins.

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