BTC

ETH

S&P Futures 500

$57,070.19

$3,256.29

$5,088.75

(+4.52%)

 (+2.68%)

(+0.20%)

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

  • U.S. durable goods orders plummet; Apple exits EV market, easing competition (More in Macro & TradFi)
  • Uniswap announces new updates; Blast sees over $2.1B TVL ahead of mainnet launch (More in DeFi & CeFi)
  • UTXO bands are indicative of an early bullish cycle; ETH and BTC see the highest P/L ratios in 3 months (More in On-Chain)
  • Over $314.62M of futures market liquidated; BTC’s 7-day and 30-day ATM IV is stabilizing (More in Crypto Derivatives)
  • BTC inches higher, briefly breaking the $57K level while ETH remains relatively flat (More in Crypto Technical Analysis)

Macro & TradFi

In January, the U.S. experienced its most significant decline in durable goods orders in nearly four years, signaling a potential slowdown in economic momentum at the year's start. This downturn, accompanied by a modest uptick in core capital goods orders, highlights the challenges facing business investment in equipment. Concurrently, consumer confidence dipped in February, reflecting growing concerns about the labor market and political climate. This shift in sentiment comes amid a broader trend of weakening economic indicators, including retail sales and housing starts, despite economists' consensus that a recession is not imminent. The cooling demand for durable goods, such as commercial aircraft, and the stabilization, yet not full recovery, of manufacturing post-Federal Reserve interest rate hikes, underscore the complexities of the current economic landscape. The decline in consumer confidence, influenced by less optimistic views on job availability and political uncertainty, further complicates expectations for economic performance, despite a still-resilient labor market.

In other news, Apple's surprise decision to halt its electric vehicle (EV) program before launching into the market serves as a significant indicator of the challenges within the EV industry, offering a reprieve to existing automakers like Tesla and Detroit's giants. This move eliminates a potentially formidable competitor, especially considering Apple's substantial financial resources. The EV market, characterized by slowing growth, high vehicle costs, and inconsistent charging infrastructure, is becoming increasingly competitive. Tesla, General Motors, and Ford, among others, have recently faced demand slowdowns and have adjusted their investment and production strategies accordingly. The exit of Apple from the EV race not only reduces competition but also releases a pool of skilled engineers and professionals into the job market, potentially benefiting other companies in the sector. This development highlights the complexities and difficulties tech companies face when attempting to disrupt the traditional automotive industry, despite their technological prowess and innovative capacities.

Lastly, Wall Street experienced mixed results as investors anticipated new inflation data crucial for guiding U.S. monetary policy. The S&P 500 slightly rose by 0.17%, while the Dow Jones Industrial Average faced a minor setback, dropping by 0.25%. Conversely, the Nasdaq showed resilience with a 0.37% increase. Chevron saw a 1.5% decline amid concerns that its ambitious $53 billion acquisition of Hess might be jeopardized due to a potential challenge over the control of a significant oil asset. On a positive note, Apple's stock climbed by 0.8% following reports that the company is reallocating resources from its electric vehicle project to artificial intelligence developments. The market's attention is now focused on the forthcoming release of the U.S. Core PCE data, a key indicator of inflation, which could have significant implications for future monetary policy actions.

CeFi & DeFi

  • Uniswap launches three new releases
  • Blast sees TVL cross $2.1B ahead of mainnet launch
  • Blackrock’s BTC ETF hits record volume for second consecutive day
  • HTX withdraws Hong Kong application
  • Binance Lab invests in Babylon

Uniswap is set to launch a web wallet extension, aiming to streamline the user experience by eliminating the need for pop-ups and transaction windows during interactions with the platform. This new development was announced on February 27, with a waitlist currently open for users who have secured a uni.eth username. The Uniswap Wallet extension is designed to allow users to send, receive, buy, and swap various tokens and altcoins directly from their web browsers, enhancing the convenience and accessibility of managing digital assets. The extension is part of Uniswap's broader initiative to offer a more integrated and user-friendly platform for cryptocurrency transactions. It is accompanied by several other notable enhancements to the Uniswap platform. These include the introduction of Limit Orders and Data & Insights, which collectively aim to empower users to make more informed and efficient trading decisions. Limit Orders, for instance, allow users to specify the price at which they wish to buy or sell tokens, automating the execution of trades when market conditions meet their criteria. Additionally, updated Token Detail Pages and Pool Detail Pages provide users with real-time charts, transaction logs, and other relevant data to aid in their trading strategies.

Meanwhile, Blast has seen a significant surge in interest, with its total value locked (TVL) surpassing $2.1 billion ahead of its mainnet launch scheduled for February 29. This remarkable growth in TVL, which represents a more than 2200% increase since the protocol's bridging feature was introduced on November 22, is largely driven by users looking to participate in an anticipated airdrop of the Blast token, expected to occur in May. The protocol has attracted attention not only for its rapid growth but also for the controversies surrounding its operations, including restrictions on withdrawals until the mainnet launch. However, despite all these controversies, Blast has managed to secure a substantial seed funding round and continues to push forward with its development plans, signaling strong support.

On-Chain

In an analysis by CryptoQuant, the UTXO age bands graph for Bitcoin reveals patterns of investment and market cycles, showing notable upticks in short-term band activity—where Bitcoin has been moved recently—during rapid price increases. This suggests that new investor participation tends to surge alongside rising prices. As of late 2023 and early 2024, we have seen a marked increase in these younger UTXO age bands, indicative of a growing early-stage bull market potentially spurred by the introduction of a Bitcoin spot ETF.

In an analysis by Santiment, Ethereum has exhibited an impressive on-chain transaction profit/loss ratio, the highest in the past three months, with 2.3 times as many transactions occurring in profit compared to those at a loss. Bitcoin is not far behind, showcasing a healthy economic activity with a 1.8 profit-to-loss transaction ratio. However, Cardano presents a contrasting scenario where more transactions are occurring at a loss rather than in profit, hinting at potential investor caution or a response to unfavorable market conditions.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH increased slightly to 58.07% and 62.11%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH increased to 2.73%  and 2.01%.
  • The futures market witnessed $314.62M worth of liquidations, with shorts representing 56.6%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

45.55%

ADA

dYdX

OKX

42.49%

DOGE

OKX

dYdX

41.54%

DOGE

Binance

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.

BTC’s 7-day and 30-day ATM IV are stabilizing at 58.65% and 56.41% respectively after the market's response to BTC’s price breaking the $56K mark and forming a new all-time high this year. This is possibly due to the market’s anticipation of the Federal Reserve potentially keeping the interest rate higher than expected in the near to medium time horizon, which would not be a bullish scenario for traders given that they are unlikely to accumulate BTC if that were to occur. However, traders may still be expecting a rate cut in March, which may be perceived to be a period of volatility.

The term structure has changed into backwardation with a slight increase in the short-term IV for contracts expiring within the next nine days and a decrease in the medium to long-term. This could be in anticipation of the Core PCE data release due tomorrow, which is a key indicator used by the Fed in determining the interest rate policy, as such, the data release may precede volatility in the BTC market.

BTC 25 Delta skews (C-P) indicate a positive skew, reflecting a bullish sentiment for BTC traders. The 7-day skew is, however, displaying a downward trend, suggesting that BTC option traders are increasingly hedging their positions with optionality, following BTC’s 1Y all-time high. The Federal Reserve’s interest rate expectations in the near to mid-term are uncertain, leading to higher Put purchases.

Lastly, during the US Trading Session, @Paradigm highlighted option flows today. For BTC, this includes the purchase of a custom 176x +1.00-call-29-Mar-24 45k -1.25-call-28-June-24 70k, and a 150x 29-Mar-24 54k/50k/45k Put Butterfly Spread. For ETH, notable ones include 19000x 8-Mar-24 3000 put bought and 1000x 26-Apr-24 3000 put sold.

Crypto Technical Analysis

BTC's upward momentum persists on the 4-hour chart, with a brief breach and subsequent resistance encountered at the $57K mark, serving as a key psychological level despite limited technical significance. Looking ahead, the $58K threshold, as discussed previously, remains the immediate resistance level, last observed in 2021 from a technical standpoint. Conversely, the trendline that previously acted as resistance now serves as immediate support at $54.5K in the event of a pullback from current levels, representing a potential downside of approximately 4%.

On the other hand, ETH has remained relatively flat, hovering around the resistance $3.22K zone. As such, the prior analysis holds that the resistance range between $3.22K to $3.32K serves as the key resistance at the place where the upper boundary of the previously identified ascending channel intersects. However, in the event of a retracement, the channel's lower boundary would serve as the immediate support zone, approximately between the range of $3K to $3.05K, indicating a potential downside of around 7%. 

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Treehouse Research 🌳