BTC

ETH

S&P 500 Futures

$64,100.75

$2,637.25

$5,785.00

(+1.95%)

 (+0.42%)

(+0.23%)

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

GM 🌳

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August 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • Traders divided on Fed's November rate cut; BOJ holds off on hikes as service inflation steadies (More in Macro & TradFi)
  • Alameda Research CEO Caroline Ellison sentenced two years in prison; Sky reconsiders WBTC offboarding (More in DeFi & CeFi)
  • TON Network DEXs see rising activity as STON.Fi dominates; Bitcoin's hashrate shifts towards U.S. miners (More in On-Chain)
  • BTC sees divergence between 7 and 30-day ATM IVs; Skews remain in neutral territory, indicating market uncertainty (More in Crypto Derivatives)
  • Bulls push price of BTC into resistance zone; ETH trades near resistance level (More in Crypto Technical Analysis)

Macro & TradFi

Traders are increasingly divided over the Federal Reserve’s next interest rate cut in November, with market expectations split between 25 bps and 50 bps. This uncertainty stems from weak consumer confidence data and mixed signals from Fed officials. Futures positions tied to short-term rates, particularly in two-year Treasury and SOFR futures, have surged, though traders remain cautious, unlike their clear preference for a half-point cut before the September meeting. The swaps market now prices in about 75 bps of total cuts for the remainder of 2024, signaling potential volatility as the Fed's decisions are closely watched. Increased futures and options positioning reflects both anticipation of further easing and hedging against downside risks.

Meanwhile, Japan's corporate service inflation remained steady at 2.7% in August, driven by price hikes in wage-sensitive sectors such as temporary work agencies and car repair services. This aligns with the Bank of Japan's (BOJ) view that rising wages are prompting firms to pass on higher labor costs. BOJ Governor Kazuo Ueda emphasized the importance of October's service price data, a period when companies typically revise prices, in assessing whether inflation is broadening enough to justify further interest rate hikes. With key inflation data due in late November, the BOJ is likely to hold off on rate adjustments in its October meeting. This careful approach highlights the central bank's focus on achieving stable inflation amid economic uncertainties.

Lastly, the S&P 500 and Dow Jones Industrial Average closed at record highs on Tuesday, driven by a surge in mining stocks following China's announcement of a large-scale stimulus package aimed at boosting its economy. Despite a dip in U.S. consumer confidence, the materials sector led gains as metal prices, including copper and lithium, rallied. Major miners like Freeport-McMoRan and Southern Copper saw significant increases. U.S.-listed Chinese stocks also jumped in response to the stimulus. However, Visa shares dropped 5.49% after the Department of Justice filed an antitrust lawsuit, weighing down the financial sector. Meanwhile, tech stocks, including Nvidia, helped lift the broader market as traders anticipated upcoming economic data, including jobless claims and inflation reports.

DeFi & CeFi

  • Caroline Ellison gets 2-year prison sentence for FTX fraud
  • Polymarket surpasses $1B of betting volume on U.S. presidential election
  • Sky reconsiders offboarding WBTC
  • USDC issuer Circle unveils new compliance tool for programmable wallets
  • Solana Labs partners with Google Cloud to launch Web3 API

Caroline Ellison, former CEO of Alameda Research, has been sentenced to two years in prison for her role in the FTX fraud, where billions of dollars in customer funds were misappropriated. Ellison cooperated extensively with prosecutors, serving as a key witness in the case against FTX founder Sam Bankman-Fried, who received a 25-year sentence. Despite her cooperation and expression of remorse, Judge Lewis Kaplan noted that it could not fully absolve her. Ellison’s testimony provided detailed evidence of the criminal conspiracy at FTX, including falsifying balance sheets and misusing customer deposits.

In other news, Sky, the DeFi lender formerly known as MakerDAO, is reconsidering its decision to offboard wrapped bitcoin (WBTC) as collateral after gaining clarity from BitGo CEO Mike Belshe. Concerns had arisen due to Tron founder Justin Sun's involvement in the custody of Bitcoin backing WBTC, with Sky's advisor, BA Labs, initially recommending the offboarding. However, after discussions revealed that Sun would not have direct control over key management practices, BA Labs revised its stance, citing a reduced risk exposure from WBTC. As a result, Sky may pause the offboarding process, despite competition from alternative wrapped bitcoin products gaining traction in the market.

On-Chain

According to Joaowedson from CryptoQuant, the TON Network has experienced a significant surge in activity on its DEXs, with the number of addresses and transactions rising sharply. This growth comes as TON’s price stabilizes, indicating that new traders are joining the ecosystem even after missing early speculative opportunities. STON.Fi has emerged as the dominant DEX, accounting for 90% of all transactions, while competitors like DeDust and Megaton Finance have struggled to maintain relevance. 

According to another analysis from CryptoQuant’s Ki Young Ji, Bitcoin's hashrate dominance is gradually shifting towards U.S. mining companies. Currently, Chinese mining pools still control 55% of the network, but U.S.-based pools have grown to manage 40%. This trend reflects the differing client bases: U.S. pools primarily serve large institutional miners, while Chinese pools continue to support smaller, independent miners in Asia, which signals increasing institutional involvement in the U.S. mining sector.

Derivatives

  • Funding rates for BTC remained positive while that of ETH flipped to negative. 
  • Deribit Implied Volatility Index (DVOL) for BTC increased slightly to 51.59%, while that of ETH remained flat at 60.28%.
  • The 30-day 25-delta skew (C-P) for BTC and ETH decreased to -0.06 and -1.29, respectively.
  • The futures market witnessed $108.21M in liquidations in the last 24 hours, with shorts representing 58.40%.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

18.46%

BNB

Binance

OKX

11.88%

BTC

Binance

dYdX

10.94%

BNB

Binance

Bybit

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 shown a divergence across different tenors. While the shorter-dated 7-day IV experienced a slight drop in the last 24 hours, the 30-day IV increased. This suggests that the market anticipates a period of slight stability as the crypto major approaches the resistance zone. However, the longer-term outlook remains uncertain, with traders expecting a significant swing in the month ahead.

The BTC term structure remains in a contango shape, showing minimal variations across the curve over the last 24 hours.

The call-put skew, on the other hand, has converged near neutral territory. This further reinforces the earlier analysis, indicating that the market implies uncertainty about BTC's future direction.

Lastly, @Paradigm highlighted a trading session with mixed flows through call buying. Key BTC trades encompassed the purchase of 375x 25-Oct-24 $55K Put, 250x 27-Sep-24 $65K Call, and 250x 27-Dec-24 $100K Call. Meanwhile, in ETH, the most notable transaction was the purchase of 2,125x 28-Mar-25 $3K/4K Call Spread.

Crypto Technical Analysis

Moving on to technical analysis, bulls took over the BTC major, and buying pressure increased, pushing the price into the resistance zone, with BTC currently at $64.3K. A breakout above the resistance zone could signal strong bullish momentum where the subsequent resistance level is at $69.7K, an 8.3% increase. If the price fails to hold, the support level is $56K. Furthermore, BTC is trading near the upper Bollinger Band and RSI is oscillating at 63.81, both indicators suggesting that BTC may be approaching overbought conditions. Traders should watch the price action around this resistance zone for any potential breakout or signs of reversal.

On the other hand, ETH is trading at approximately $2.6K, nearing the resistance zone marked between $2.7K and $2.8K, and the immediate support level is at $2.2K. This resistance zone is crucial as the price of ETH has been rejected from this resistance zone multiple times in the past. The price of ETH is near the upper boundary of the Bollinger Band, and the RSI level is at 61.74, suggesting that market sentiment is cautiously bullish with room for price appreciation. Traders should look out for a potential break-out above this resistance or pull-back towards the $2.2K support level.

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TRHX Research (Formerly Treehouse Research) 🌳