BTC

ETH

S&P Futures 500

$51,424.20

$2,989.23

$5,100.25

(-0.17%)

 (+1.73%)

(+1.24%)

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

GM Treehouser 🌳

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January 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • Reddit files for IPO; Nvidia breaks Meta record in price appreciation (More in Macro & TradFi)
  • Valkyrie CIO says ETH ETF approval will not come so soon; $STRK token unlock schedule changed (More in DeFi & CeFi)
  • Nethermind: Lido Node operator sold a total of 3.41M STRK tokens worth $6.74M so far; Wallets holding more than 1k Bitcoin increased by 7.4 (More in On-Chain)
  • C-P skews picked up while BTC term structure potentially implies a quiet weekend ahead (More in Crypto Derivatives (More in Crypto Derivatives)
  • BTC tests channel's lower limit; ETH repeatedly confronts $3K resistance level (More in Crypto Technical Analysis)

Macro & TradFi

Reddit has officially filed for its Initial Public Offering (IPO) with the Securities and Exchange Commission, planning to list on the New York Stock Exchange under the ticker symbol "RDDT." This move marks a significant milestone as the first major tech IPO of the year and the first social media company to go public since Pinterest in 2019. Reddit has grown into one of the most-visited websites in the U.S., boasting over 100,000 communities and millions of daily and weekly active users. It has a vast user base and $804 million in annual sales for 2023, with plans to enhance its search capabilities, leverage artificial intelligence for its ad business, and explore new revenue streams through data licensing and a user economy.

Nvidia Corp. achieved a record-setting surge in market value, adding approximately $277 billion to reach a near $2 trillion capitalization after a 16% jump in its stock price, surpassing Meta Platforms Inc.'s previous record gain. This historic increase was fueled by Nvidia's exceptional earnings report and optimistic revenue forecast, highlighting the substantial impact of artificial intelligence (AI) technology spending by major clients such as Microsoft Corp. and Meta. The company's performance demonstrated its dominant position in the AI sector and showed the ongoing robust demand for AI technologies, with analysts noting Nvidia's unprecedented revenue guidance surpasses its continued potential for growth in a rapidly evolving tech landscape.

The S&P 500 and Dow Jones Industrial Average hit record closing highs, climbing 2.11% and 1.18%, respectively. Nvidia's announcement led to a 16.4% spike in its shares which influenced the broader market, with the Nasdaq Composite also advancing by 2.96%. Related tech companies. Advanced Micro Devices (AMD) saw its shares increase between 4.2% and 32.9%, alongside Super Micro Computer and Arm Holdings. The Philadelphia Semiconductor Index notably jumped by 5%, marking its largest one-day gain since October. Alphabet, Microsoft, and Meta Platforms saw their stock prices climb between 1.1% and 3.9%. This rally extended beyond traditional tech to include biotech firms like Moderna, which surged 13.5% after reporting a surprise fourth-quarter profit.

CeFi & DeFi

  • Valkyrie CIO says ETH ETF will take close to 2 years
  • Valkyrie launches 2x leveraged Bitcoin futures fund
  • STRK jumps after delayed token unlocks
  • Ethena Labs founder clarifies USDe stability
  • FTX plan of $1B sale of stake approved
  • JPM says retail investors are likely behind the recent market rally

Valkyrie's Chief Investment Officer, Steven McClurg, anticipates that the approval for a spot Ethereum ETF might take 1-2 years, despite the recent momentum in the crypto industry following the SEC's approval of the first spot bitcoin ETFs in the U.S. last month. The optimism around the spot Ethereum ETF comes as Fidelity and BlackRock have applied for these ETFs, with some analysts predicting potential SEC approval as early as May this year. However, Valkyrie is currently not pursuing a Spot Ethereum ETF. The differentiation between Bitcoin and Ethereum, along with the complexity of Ethereum's staking components, are seen as factors that might extend the SEC's review process

In other news, $STRK saw a significant price jump of up to 10%, reaching over $2, after StarkWare, the developer decided to revise its token unlocking schedule following community backlash. Initially, StarkWare had planned to unlock 13.4% (1.34 billion) of the total 10 billion STRK tokens minted on April 15. However, after considering feedback from the ecosystem and collaborators, StarkWare opted to reduce this to just 0.64% (64 million tokens) unlocking on the same date. This decision was part of a broader adjustment to make the unlock schedule more gradual, extending the distribution period until March 15, 2027, with varying monthly unlock rates aimed at easing concerns over potential market impact.

On-Chain

According to an on-chain analysis done by Lookonchain, Nethermind: Lido Node operator has sold a total of 3.41M STRK tokens worth $6.74M so far, and still holds 6.74M STRK valued at $12.33M.  STRK tokens were airdropped to airdrop hunters and blockchain users just this week, and traders have been selling their airdrops consistently. This move by Nethermind could indicate more selling over the short-term as traders take profits and STRK token gets distributed from profit-driven airdrop farmers to investors with conviction in Starkware network, potentially seeing the dampening of STRK’s declining price.

In an analysis by Santiment, on-chain wallets holding more than 1k Bitcoin have increased by 7.4% while wallets holding less than 1 Bitcoin dropped by 1% over the past month. The growth in Bitcoin whale wallets also indicates the fastest-growing rate in 2 years, signaling a trend of accumulation and positive sentiment among these traders. This coincides with the period of Bitcoin getting scarcer leading up to the halving and mining hash rate difficulty at all-time highs, which could increase Bitcoin’s value.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • The futures market witnessed $126.58M worth of liquidations, with longs representing 51.19%%.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained relatively stable at 55.28% and 60.44%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH rose significantly to 2.52% and 3.63%, respectively.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

57.59%

SOL

OKX

dYdX

45.01%

SOL

Bybit

dYdX

41.42%

ETH

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.

The stability in BTC's ATM IVs persists across both the 7-day and 30-day timeframes, reflecting the market's anticipation of relatively stable price movements in the near term. This trend aligns with BTC's current trading behavior, which has remained within a tight range below the $52K resistance zone. The lack of significant fluctuations in IVs suggests that market participants do not foresee any immediate catalysts that could drive significant price changes in the short term. 

While the term structure of BTC largely maintains its contango state, a significant decline in IV was observed specifically with 2-day contracts. This decline suggests that traders may anticipate a relatively quiet weekend ahead regarding price movements or significant market developments. 

The BTC 25-delta skew displays a slight uptrend in both the 7-day and 30-day periods, reflecting growing confidence among investors in Bitcoin’s potential price action. This reversal in skew indicates a shift in sentiment towards a more positive outlook among traders, as they are less concerned about prices increasing relative to decreasing.

Lastly, during the US Trading Session, @Paradigm highlighted option flows this week and emphasized upside coverage with strategic call purchases and structured positions. Key BTC trades encompassed the purchase of 200x 1-Mar-24 55k Calls and 150x 23-Feb-24 52k / 24-Feb-24 52k Call Calendars, alongside notable ETH transactions such as 2000x 24-Feb-24 3.1k Calls and 2000x 29-Mar-24 3.2k Calls. Additionally, a prominent ETH Call Calendar was recorded with the purchase of 1000x 23-Feb-24 3.1k / 24-Feb-24 3.1k.

Crypto Technical Analysis

On the 4-hour chart, BTC is currently experiencing a contraction in volatility as it approaches the lower boundary of the previously established horizontal channel, which coincides with the 50MA. Should the lower boundary give way, the next significant support is approximately $46.5K, representing a potential 12% decrease from the current levels. On the contrary, the upper resistance stands firm, around $54K. Observing the Relative Strength Index (RSI), it registers at approximately 48, indicating a neutral momentum without clear signs of overbought or oversold conditions. The RSI's flat trajectory aligns with the market's indecisive stance, waiting for a catalyst to dictate the next directional move. It's crucial to monitor the market's reaction to these levels as they are key to understanding the short-term trend.

Moving on, ETH continues to challenge the $3K resistance level on the 4-hour chart, with the price action displaying repeated tests of this crucial threshold. This indicates a strong contest between buyers trying to push the price above this point and sellers aiming to maintain it as a ceiling. The RSI, positioned at 58.67, resides in moderately bullish territory, suggesting a slight tilt towards buying pressure but without signaling overbought conditions. Should Ethereum succeed in breaching the $3K mark, it could propel the price toward the next resistance at 3.2K, an upside of 10.7% from current levels. Conversely, failure to break this resistance could result in a retracement, with traders eyeing lower support levels at 2.7K for potential re-entry points. 

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