BTC

ETH

S&P Futures 500

$29,773.96

$1,888.41

$4,565.75

(-0.80%)

 (-0.30%)

(-0.48%)

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

  • US housing sales dip; UK consumer confidence decline amidst borrowing costs (more in Macro & TradFi)
  • U.S. House Republican Committees launch digital assets bill; Coinbase to fully sunset its Borrow program in November (more in DeFi & CeFi)
  • Whale accumulation drives Chainlink's token surge following the release of Cross-Chain Interoperability Protocol (CCIP) (more in On-Chain)
  • BTC call skews pop higher as bullish trades dominate the tape; IV for BTC continues to trade higher than ETH (more in Crypto Derivatives)
  • BTC forms a potential double bottom, ETH support channel holds firm (more in Crypto Technical Analysis)

Macro & TradFi

In the U.S. housing market, sales of existing homes reached a five-month low in June, witnessing a decrease of 3.3% to an annualized rate of 4.16 million units. Simultaneously, the median selling price experienced a downtrend, settling at $410,200. Despite indications of a slowing housing market, the U.S. labor market has shown notable resilience. Surprisingly, jobless claims have fallen for the second week to 228,000, marking the lowest level in two months. The Labor Department's data has sparked cautious optimism that the economy may evade a recession this year, especially following the recent revelation of subsiding inflation in June.

U.K. consumer confidence saw a sharp drop in July due to rising borrowing costs and high prices. The consumer confidence index fell six points to -30 compared to the previous month, marking the most significant drop since April 2022. This decline occurred despite improved expectations during H1 2023 amidst a cost of living crisis, with inflation outpacing income growth and rising interest rates impacting homeowners and renters. Notably, the U.K. surveyed the population before news of a greater-than-expected decrease in June's inflation to 7.9%, which led to adjusted market expectations for an interest rate rise from the Bank of England in August. The current prediction places the peak of interest rates between 5.75% and 6%.

During Tuesday's trading session, the S&P 500 rose by 0.68%, the Dow Jones Industrial Average rose 0.47%, and the Nasdaq Composite increased by 2.05%. The Dow Jones continued its positive streak for the ninth straight session, its longest since 2017, while the NASDAQ experienced its largest drop in nearly five months. Tesla plunged by 9.74% after Elon Musk said production would slow in Q3 due to shutdowns for factory upgrades while revealing plans to continue with price cuts, potentially squeezing margins further.

DeFi & CeFi

  • US House Republican Committees introduce a joint digital assets bill
  • Coinbase to fully sunset Bitcoin-backed loan program for retail customers
  • Arbitrum launches Foundation Grants, focusing on dApps and infrastructure in Phase 1
  • SEC's Gary Gensler seeks additional funding to protect investors from the crypto industry
  • Web3 company Cosmic Wire closes $30 million seed round led by Polygon and Solana Foundation
  • Coinbase's Base aims to incorporate zk-proofs alongside optimistic rollups

On July 20, Republican U.S. House Agriculture and Financial Services Committees members introduced a joint bill, the Financial Innovation and Technology for the 21st Century Act, to create a regulatory framework for digital assets. The 212-page bill addresses regulatory gaps by giving the CFTC jurisdiction over digital commodities and clarifying the SEC's jurisdiction. It establishes conditions for digital assets to be considered commodities, with decentralization as a primary requirement. The bill also requires agencies to collaborate with foreign regulators and study NFTs' role in traditional marketplaces. This bill competes with the bipartisan Responsible Financial Innovation Act introduced by Sens. Cynthia Lummis and Kirsten Gillibrand.

In other news, Coinbase will fully sunset its Borrow program for retail customers on November 20, ending the option to obtain cash loans using Bitcoin as collateral. New loans are unavailable, and customers must settle outstanding balances by the deadline or risk losing their Bitcoin collateral. The termination applies solely to retail customers, not institutional ones, as this decision comes amidst Coinbase's legal battle with the SEC, in which Coinbase faces accusations of selling unregistered securities.

On-Chain

Bitcoin's Spent Output Profit Ratio (SOPR) indicates a profit-dominant regime with a value of 1.06, signifying that the average coin changing hands is locking in a 6% profit. This trend shares similarities with the periods observed in 2016 and 2019. SOPR values above 1.0 suggest profit-taking is underway, and returns to the breakeven level indicate a generation of support in the near term. As Bitcoin prices rise, the Short-Term Holder (STH) cohort becomes increasingly likely to spend and take profits. According to @glassnode, the breakdown of exchange inflow volumes points to STH as the primary active entity in the market. Out of the total 39.6k BTC in daily exchange inflows, approximately 78% is associated with the STH cohort, consisting of investors active since early February.

Chainlink's LINK token surged as whales increased their holdings following the Cross-Chain Interoperability Protocol (CCIP) release. This protocol aims to facilitate the development of cross-chain applications and services, recently going live for early-access users on multiple blockchains like Avalanche, Ethereum, Optimism, and Polygon. On-chain data reported by @lookonchain reveals that a few large holders added more than $7.8 million worth of LINK to their holdings in the past 24 hours. As a result of this whale activity, the LINK price saw a substantial increase of over 17% during the same period.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH
  • Deribit Implied Volatility Index (DVOL) fell to 41.58% and 40.53% for BTC and ETH respectively
  • 30-day 25-delta skew (C-P) for BTC and ETH is at 4.17% and -0.09% respectively
  • The futures market witnessed $79M worth of liquidations on Thursday with longs representing 55% of the total

Top 3 CEX USDT perp funding rate arbitrage based on the last 24-hour lookback:

Net Annualized APR

Perp (USDT pair)

Long on

Short On

14.68%

BNB

Binance

OKX

12.07%

XRP

OKX

Bybit

9.07%

SOL

OKX

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


IVs for BTC and ETH dwindle lower as prices trade around their $30K and $1.9K levels, respectively.

Elsewhere, the term structure for both BTC and ETH remains in contango, and IV has changed little across the curve.

On Thursday, there was a significant increase in the 30-day skew (C-P) on BTC, rising sharply to 4.17%, even though spot trading remained near the lower end of its recent range. On the other hand, the 30-day skew (C-P) on ETH reversed to a negative value, indicating that 25-delta puts are now trading at higher prices than calls.

Lastly, bullish flows continue to dominate the tape for BTC, with significant trades occurring, like 462x BTC 11-Aug-23 $32.5K/$45K bull diagonal spreads and 150x BTC 25-Aug-23 $35K/$40K call spreads. Additionally, there has been a considerable purchase of far-dated volatility on ETH, driven by the fact that the recent ETH IV has been trading at its yearly low and is below BTC's IV. We notably observed a substantial buy of 1,000x ETH 29-Dec-23 $1.9K straddles on Thursday.

Crypto Technical Analysis

BTC briefly regained support at the lower bound of the channel resistance but failed to sustain it, leading to a 1.6% drop, reflecting trends in the US equities market. As a result, BTC has now broken below the channel and is trading below the 200-day SMA. Currently, BTC is searching for potential horizontal support around $29.7K, likely forming a double bottom pattern. However, a failure to hold this level may trigger further downside movement until BTC finds support at the lower trendline formed by higher lows on the daily timeframe, with a range of $27.2K to $27.6K.

As expected, ETH's lower bound channel remains firm despite market pullbacks. The rising 200-day SMA approaching the channel lower bound further solidifies it as a critical support zone. The previous analysis remains valid, with the following crucial location to monitor being the potential crossover of the 50-day SMA around $1.92K. Conversely, failure to hold this level may lead to ETH testing the support zone last seen in late June, ranging from $1.77K to $1.8K.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

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Treehouse Research 🌳