BTC

ETH

S&P Futures 500

$25,194.50

$1,655.00

$4,376.50

(-2.99%)

 (-5.07%)

(+0.17%)

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

  • The Fed halts interest rate hike after 15 months; Chinese officials have been having emergency meetings to discuss economic recovery (more in Macro & TradFi)
  • South Korea’s Delio suspends withdrawals; Crypto prime brokerage FPG halts withdrawals after cyber attack (more in DeFi & CeFi)
  • Traders' sentiment hits lowest level since March 2020 amidst concerns over Binance and Coinbase (more in On-Chain)
  • Implied volatilities popped higher as spot sold-off violently; Vol sellers back in action as July strangles sold on BTC (more in Crypto Derivatives)
  • BTC and ETH charts reveal potential volatility, with critical support levels undergoing rigorous testing (more in Crypto Technical Analysis)

Macro & TradFi

The Federal Reserve held interest rates steady following 15 months of consecutive hikes, indicating a pause in their tightening campaign. While the central bank acknowledged the need for further rate increases to combat inflation, policymakers decided to assess additional information before taking further action. The accompanying projections showed that borrowing costs are expected to rise to 5.6% by year-end, reflecting the consensus among most policymakers that further tightening is necessary. Fed Chair Jerome Powell highlighted the persistent inflation pressures and emphasized that the process of bringing inflation back down to the 2% target will take time. The decision had an immediate impact on markets, stocks pared earlier gains while yields on two-year Treasuries surged. Overall, this pause in rate hikes suggests a cautious approach by the Fed as they continue to monitor economic data and assess the evolving outlook for inflation.

Meanwhile, senior Chinese officials have been holding urgent meetings with business leaders and economists to seek advice on revitalizing the country's economy. The discussions focused on stimulating economic growth, restoring confidence in the private sector, and reviving the real estate industry. Participants emphasized the need for urgent policy revisions and a more market-oriented approach to foster growth. There was a consensus among government officials and meeting attendees that coordinated monetary and fiscal stimulus is necessary, but concerns were raised about the ambiguity surrounding the timing and form of such measures. These meetings reflect China's recognition of the challenges faced in the post-pandemic economic recovery, as weak sentiment and policy crackdowns have hindered progress. The central bank recently cut interest rates unexpectedly, and officials are reportedly discussing a broad package of stimulus measures. Data expected to be released soon is likely to show a further slowdown in China's economy, prompting discussions on how to address the issues and encourage business confidence.

Lastly, US equity markets pared earlier gains and remained flat after the Federal Reserve's decision to pause monetary tightening. The S&P 500 saw a marginal gain of 0.1% on Wednesday, recouping all of its losses since the first rate hike in March 2022, while the Nasdaq rose 0.7% to continue its strong performance this year. Investor focus now shifts to China's upcoming economic data releases, including retail sales and industrial output figures, which are expected to reveal further signs of a slowdown in the country's recovery. Notable corporate news includes Advanced Micro Devices Inc. rallying on the unveiling of its planned line of artificial intelligence processors, while Tesla Inc. snapped its 13-day winning streak and UnitedHealth Group Inc. faced a slump amid concerns over rising medical expenses.

DeFi & CeFi

  • South Korea's largest crypto lending firm Delio suspends withdrawals
  • Crypto prime brokerage FPG halts withdrawals after $15 million cyber attack
  • Decentralized exchange Hashflow hacked, possibly white-hat op
  • Options exchange Aevo announces public launch, offers Bitcoin trading
  • U.S. judge rejects SEC's request to freeze Binance.US assets
  • Newly surfaced video shows SEC's Gensler saying BTC and ETH 'not securities'
  • SEC still needs 4 months to respond to Coinbase's petition for rulemaking

South Korean virtual asset manager and lending platform, Delio, has temporarily suspended customer withdrawals to safeguard their assets amidst heightened market volatility caused by the suspension of digital asset deposits and withdrawals at Haru Invest. For now, Delio's decision is to protect customer funds until the situation is resolved. The company, holding around $1B in Bitcoin, $200M in Ether, and approximately $8.1B in altcoins, will provide updates on the situation and measures taken to ensure customer asset protection.

Crypto prime broker Floating Point Group (FPG) suffered a cyber-attack resulting in a loss of between $15-20M in cryptocurrencies. Previously, FPG had undergone cybersecurity audits and penetration testing, earning it a SOC 2 certification. Now, after discovering the breach, FPG managed to lock third-party accounts and secured wallets, limiting the impact. On the whole, trading, deposits, and withdrawals have been halted, and the company is cooperating with authorities and Chainalysis to investigate the incident and recover the assets.

Multi-chain trading platform Hashflow experienced an incident affecting hundreds of thousands of funds, with $600,000 being affected. While not explicitly confirming an attack, Hashflow acknowledged the impact on funds and stated its commitment to making affected users whole. The decentralized exchange (DEX) was unaffected, and Hashflow plans to publish a post-mortem. Initially alerted by PeckShield, the incident involved a white hat hacker who created a recovery function within their contract. Hashflow endorsed the hacker's recovery contract and provided instructions for users to recover their funds or donate 10% to the white hat.

On-Chain

Based on the data reported by @santiment, the weighted traders' sentiment for major altcoin pairs, including XRP, BNB, and ADA, has reached its lowest level since Mar 2020, influenced by declining cryptocurrency prices and growing concerns surrounding Binance and Coinbase. This decline in trader sentiment indicates a strong negative sentiment reminiscent of the market crash during the onset of the Covid pandemic. However, such situations have historically presented buying opportunities for astute investors, as market downturns often create favorable conditions for acquiring assets at discounted prices.

The data provided by @glassnode confirms a similar sentiment regarding the current state of the market. The Open Interest in Perpetual Futures Contracts on Binance has recently reached a one-month low of $1.8M, with a previous observation of the same value occurring in Jun 2023. This decline in Open Interest, coupled with negative funding rates and low interest in perpetual futures contracts, suggests a cautious and possibly bearish outlook among traders.

Crypto Derivatives

  • BTC, ETH, and altcoins funding rate turned negative
  • 30-day ATM IV for BTC fell to 38.62% while it rose on ETH to 42.21%
  • Deribit Implied Volatility Index (DVOL) for both BTC and ETH rose to 48.09% and 51.42%, respectively.
  • 30-day 25-delta skew for both BTC and ETH fell to -3.81% and -6.24%, 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

46.00%

BNB

OKX

Binance

18.40%

SOL

OKX

dYdX

15.65%

XRP

Binance

Bybit

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

In the futures market, approximately $148M worth of liquidations occurred yesterday, with the majority of it coming from long liquidations at $127M as the markets sold-off violently.

For options, implied volatility (IV) popped higher across the curve as spot sold-off. A notable observation is that the IV for BTC fell following its initial increase, whereas the IV for ETH has remained elevated. Meanwhile, the term structure of BTC and ETH appears to exhibit a discrepancy, with BTC currently showing contango while ETH is displaying a significant backwardation. The backwardation in the ETH term structure was likely influenced by supply and demand dynamics in the options market where significant short vol positions for ETH were closed yesterday. Furthermore, it is intriguing to note that the volatility of ETH exhibits a mere 1-point difference between the 7-day and 180-day periods.

Elsewhere, skew on both BTC and ETH has further declined, particularly on longer-dated tenors as traders are pricing a higher premium on puts relative to calls. Notably, the 30-day skew for both BTC and ETH has reached its lowest level since the USDC depeg and banking crisis that took place in March this year.

On the flow side, there is a noticeable interest among traders in dumping volatility on July contracts, particularly for BTC. This is evident from the significant amount of 940x 28 Jul 23 23K/30K BTC strangles sold yesterday (@tradeparadigm). Additionally, a substantial short call position was closed yesterday (@laevitas1); approximately 50K contracts of Sep 2.2K calls were bought to close the short position, resulting in substantial profits for the trader.

Lastly, the VIX fell the second consecutive day to 13.88%.

Crypto Technical Analysis

Moving on to the daily chart for BTC, we find the price presently probing the lower boundary of the previously identified descending channel pattern. In the short-term perspective, the RSI metric, which currently stands at 36.47 and approaching oversold conditions. As such, we may see a test at the dynamic support of this channel at this current price level, and a retest of the upper channel in the upcoming week, provided other market conditions remain favorable.

Reviewing the daily chart for ETH, the price has breached the $1.7K support level but is holding near the 200-day Moving Average (MA), which historically demonstrated a dynamic support level. The relatively low RSI at 30.26 indicates a potentially oversold market condition, suggesting that ETH may be due for a corrective bounce in the near term.

As we continue to monitor the ETH/BTC chart, it's noteworthy that the descending wedge is still in effect. This implies a negative price action for ETH and other altcoin pairs against BTC in the near term. ETH has breached the 0.067 support level against BTC and is now testing a new support at 0.06. The RSI stands at a 30-day low of 32.27 indicating an oversold market condition and a potential reversal in the near term.

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