BTC

ETH

S&P 500 Futures

$100,713.25

$3,813.25

$6,084.50

(+4.56%)

 (+5.67%)

(+0.57%)

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

GM 🌳

Welcome to the TRHX Pulse newsletter (formerly Treehouse Daily), where TRHX delivers your daily dose of financial news and insights for free! We believe you'll find it both informative and valuable.

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November 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • US Fed is expected to cut rates; ECB eyes easing of monetary policy (More in Macro & TradFi)
  • Binance announces strategic partnership with Circle on USDC adoptions; Alabama’s state auditor proposes BTC reserve (More in DeFi & CeFi)
  • BlackRock and Fidelity purchase $500M worth of ETH for ETH ETFs; BTC’s Long/Short-term Holder Supply Ratio on a declining trend (More in On-Chain)
  • BTC’s positive skew driven by MSTR’s possible Nasdaq 100 inclusion;  Expectations of a US Fed rate cut (More in Crypto Derivatives)
  • BTC pushes past $100K psychological level; ETH price action suggests a consolidation trend (More in Crypto Technical Analysis)

Macro & TradFi

In November, US inflation data came in at 2.7%, aligning with Wall Street's expectations, which has cleared the path for the Federal Reserve to implement a rate cut in its upcoming meeting. While the immediate rate cut is anticipated, the Fed's future trajectory remains uncertain. The central bank is navigating a delicate balance between controlling inflation and maintaining a healthy labor market. The market's reaction to the inflation data was positive, with US stocks advancing. However, concerns persist regarding the potential economic impact of President-elect Trump's policies, particularly his proposed tariffs, which could further exacerbate inflationary pressures.

In other news, the European Central Bank is expected to cut interest rates again on Thursday, December 12th, 2019, as inflation in the Eurozone has returned to its target and economic growth is slowing. However, some policymakers argue for a more aggressive rate cut, citing the risk of undershooting the inflation target and the potential for a deeper economic slowdown. The global economic outlook, including US protectionism and political instability in Europe, adds to the uncertainty and could necessitate further easing measures from the ECB. Ultimately, the ECB will need to balance the risks of both inflation and economic stagnation to determine the appropriate course of action.

US stocks had a mixed session on Wednesday, with a rally in Google’s parent company, Alphabet, spurring the tech-rich Nasdaq to end the day above 20,000 for the first time. The Nasdaq gained 1.77%, the S&P 500 gained +0.82%, and the Dow declined  0.22%. 7 megacap tech stocks closed at all-time highs, with Amazon, Meta, Tesla, and Alphabet adding roughly $416 billion in market cap for the day. Investors will be looking out for the PPI data release on Thursday at 21:30 SGT as well as the Retail Sales data next Tuesday at 21:30 SGT.

DeFi & CeFi

  • Binance and Circle form strategic partnership on USDC adoption
  • Alabama’s state auditor proposes a BTC reserve for the state
  • Eric Trump delivered a keynote speech at the Bitcoin MENA event 
  • Bitget announced that it is exploring setting up the EU hub in Lithuania 
  • Coinbase announced the inclusion of PNUT in its listing roadmap

Binance and Circle have formed a strategic partnership to accelerate the adoption of USDC and the broader digital asset ecosystem. This strategic partnership will see Binance integrate USDC across its platform, enabling its vast user base of 240 million to utilize USDC for trading, saving, and payment purposes. Circle, the issuer of USDC, will contribute technology, liquidity solutions, and tools to enhance user trust and foster innovation. 

In other news, Alabama's state auditor, Andrew Sorrell, has proposed establishing a Bitcoin reserve to future-proof the state's economy and attract crypto-focused businesses. He believes that Bitcoin's resilience to inflation and its independence from the U.S. dollar make it a valuable asset for the state. Sorrell's proposal aligns with a growing national trend of states and federal lawmakers exploring cryptocurrencies for economic stability, positioning itself at the forefront of this issue alongside Florida and Pennsylvania, which are reportedly exploring similar strategies.

On-Chain

An on-chain analysis by TheBlock highlighted the purchase of $500M worth of ETH in the past two days by BlackRock and Fidelity under their Ethereum ETFs ETHA and FETH, respectively. BlackRock and Fidelity have been consistently purchasing ETH, as seen in their leading all-time high inflows over the past few months. The accumulation of ETH shows traditional financial giants' confidence in Ethereum as a digital asset amidst a period when Trump has been nominating crypto-friendly individuals to represent the US government. 

On-chain data by Glassnode indicates a declining trend in the long/short-term holder supply ratio over the past couple of months. BTC is becoming more distributed among a wider group of short-term holders than solely long-term holders, which could suggest increased adoption by retail traders. This could be an important trend to watch for a shift in market dynamics, where holding is no longer a dominant strategy. Historically, When short-term holders deviate significantly from their average, it can indicate periods of market exuberance or distress.

Derivatives

  • The funding rate for BTC and ETH remained positive.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained flat at 59.59 and 72.51, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH recovered to 3.60 and 2.90, respectively.
  • The futures market witnessed $240.24M in liquidations in the past day, with shorts representing 64.60%.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

9.60%

ETH

OKX

Binance

9.33%

AVAX

OKX

Binance

9.25%

BTC

OKX

Binance

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 at-the-money IV for both 30-day and 7-day IVs remained flat at 56.42 and 55.39. The options market is currently not expecting significant price movement in the near term, possibly attributed to the perception that the Holiday Season would not draw heavy trading activity.

The recent release of the CPI data has led to a shift in Bitcoin's options term structure. Specifically, the structure has steepened back into contango, indicating that near-term futures contracts have declined in price relative to longer-term contracts. 

BTC's options skew has recovered; the 7-day call-put skew has shifted back into the positive at 2.85, and the 30-day skew has risen to 3.60. The optimism in BTC is potentially driven by the anticipated inclusion of MicroStrategy in the Nasdaq 100 index, which could significantly boost MicroStrategy's public image and attract more institutional investors to Bitcoin. Additionally, the robust CPI data highlighted a clear path for the US Fed to cut rates this month, with investors assigning more than 98 percent probability to a quarter-point rate cut. 

Lastly, @Paradigm highlighted a session with a mix of bullish and bearish structures. Key BTC trades included the purchase of 775x 20-Dec-24 $108k Calls and 350x 28-Mar-25 $70k Puts. Meanwhile, ETH saw 2500x 20-Dec-24 $3.3k Calls sold, and 2000x 27-Dec-24 $K Custom Spreads bought.

Crypto Technical Analysis

BTC has broken past the crucial psychological $100K level and is currently at $100.5K. BTC needs to remain above the $100K price level for the market to sustain this price action, but if the price action were to turn bearish, the subsequent support level would be present at $94.8K, a 5.5% decline. The price range in the upper Bollinger band suggests bullish sentiment, and the RSI level increasing to 59.33 reinforces this sentiment. 

Ethereum is currently at $3.8K and appears to be consolidating between the $3.9K resistance level, which represents an upside of 2.2%, and $3.3K support level, which represents a downside of 13.3%. ETH is currently positioned in the middle of the Bollinger Band along the SMA line, which suggests that it could continue to trade sideways before making a convincing move in either direction. 

On the other hand, the RSI is at a neutral level of 51.20, suggesting that the market is indecisive and traders should monitor the indicators for the future price action of ETH. 

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TRHX Research (Formerly Treehouse Research) 🌳