BTC

ETH

S&P Futures 500

$44,141.50

$2,310.75

$4,584.25

(+5.28%)

 (+2.59%)

(+0.34%)

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

GM Treehouser 🌳

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November 2023 Market Recap

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Our Daily View

What We Are Covering Today

  • US job openings dropped in October; Elon Musk files with the SEC to raise up to $1B for X.AI through equities (More in Macro & TradFi)
  • BlackRock received $100K seed funding for spot Bitcoin ETF; Coinbase rolls out money transfers via links on WhatsApp, TikTok, and Instagram (More in DeFi & CeFi)
  • Glassnode reveals block-space shifts due to Inscriptions; Exchange deposits signal rising institutional interest (More in On-Chain)
  • 30-day IV rises, predicting volatility; Traders hedge, revealing mid-term bearishness (More in Crypto Derivatives)
  • BTC breaks the $42K resistance and hits the $44K mark while ETH surges in a similar movement alongside it (More in Crypto Technical Analysis)

Macro & TradFi

In October, US job openings dropped to 8.7 million, marking the lowest level since early 2021, indicating a gradual cooling in the labor market. This decline, below all estimates, aligns with the Federal Reserve's aim to ease the labor market through reduced demand for new workers rather than job cuts. The strategy has been somewhat effective, with vacancies diminishing from last year's peak of 12 million, although the unemployment rate has seen a slight increase recently. The latest data, along with a separate report revealing reduced inflation in the service sector, suggests progress toward the Fed's dual mandate of employment and price stability, prompting expectations for unchanged interest rates in the upcoming policy meeting. The JOLTS data also indicates a stabilization in quits and layoffs, contributing to an overall balanced labor market. The upcoming monthly jobs report is expected to show an addition of approximately 189,000 jobs in November, with uncertainties regarding the job market's role in sustaining strong consumer spending.

In other news, Elon Musk's AI startup, X.AI, has filed with the SEC to raise up to $1 billion in an equity offering. The company, founded by Musk in July, aims to "understand the true nature of the universe" and recently released the chatbot Grok, designed with humor and real-time internet knowledge. Musk, also the CEO of Tesla and SpaceX, secured high-powered GPUs from Nvidia for X.AI earlier this year. The startup competes with ChatGPT creator OpenAI, Google's Bard technology, and Anthropic's Claude chatbot. X.AI has already raised nearly $135 million, with the first sale occurring on Nov. 29, and seeks to address its mission in collaboration with Musk's other ventures.

On Tuesday, US stock performance was mixed despite data revealing a significant drop in job openings in October, a development seen positively by the Federal Reserve in its economic slowdown efforts. The Nasdaq rose 0.3%, supported by tech mega caps, while the S&P 500 slipped 0.1% and the Dow Jones Industrial Average lost 0.2%. Apple led the Dow, gaining 2.1%, reaching a market capitalization exceeding $3 trillion, driven by robust smartphone sales. Meanwhile, the healthcare sector saw notable moves, with Merck & Co. rising 1.1% after securing a $70 million deal, and Procter & Gamble falling 3.5% due to restructuring-related charges. In the tech sector, Nvidia gained 2.3%, while Goldman Sachs and Walt Disney experienced declines after respective remarks on compensation costs and an activist investor's influence.

DeFi & CeFi

  • BlackRock received $100K seed funding for spot Bitcoin ETF
  • Coinbase rolls out money transfers via links on WhatsApp, TikTok, and Instagram
  • IBM introduces new cold storage tech for crypto assets
  • Pyth oracle network brings industry heavyweights into governance
  • Flowdesk picked by Forge to become market maker for euro-based stablecoin
  • Italy and South Korea central banks agree on CBDC cooperation
  • Crypto-friendly representative Patrick McHenry won't be seeking re-election
  • QANplatform signs $15M VC deal for its quantum-resistant layer 1 blockchain

In a recent filing with the U.S. Securities and Exchange Commission (SEC), BlackRock disclosed receiving $100,000 as "seed capital" for its proposed spot Bitcoin exchange-traded fund (ETF). The investment giant's application specified that the seed capital investor agreed to purchase $100,000 in shares on October 27, 2023, acquiring 4,000 shares at a price of $25.00 per share. The seed capital investor's identity has yet to be disclosed. In related ETF news, the SEC has extended its timeline for a decision on Grayscale’s proposed spot Ether ETF by 45 days to Jan. 25.

In other news, Coinbase is rolling out a new service enabling users to send money to each other through various popular communication platforms without incurring any fees. Users can effortlessly send funds by sharing a link on messaging apps like WhatsApp, iMessage, Telegram, social media platforms such as Facebook, Snapchat, TikTok, Instagram, or via email. This feature allows international transfers with instant settlement and no charges. Both the sender and receiver need to have the Coinbase Wallet for these transactions. If the recipient doesn't have the wallet, they'll be prompted to download it from Apple or Android app stores. Unclaimed funds after two weeks will be automatically returned to the sender. The Coinbase Wallet operates in over 170 countries, facilitating this seamless money-sharing experience.

On-Chain

In an analysis by Glassnode, a pivotal change in the allocation of Bitcoin's block space was highlighted by its latest reports. The advent of Inscriptions represents a new class of block-space consumers, introducing a competitive dynamic for transaction inclusion. With Bitcoin's block size capped, the rising incidence of Inscriptions outbidding exchange deposits for priority fees could increasingly sideline the latter. This comparative study reveals a marked reduction in the ratio of exchange deposits to total network transactions, plunging from approximately 26% in May to a mere 10% at present. Notably, when isolating non-inscription activity, this decline moderates to around 20%. This pattern suggests the growing propensity of Inscription-related transactions to allocate higher fees for transaction priority, reshaping the landscape of Bitcoin block-space economics.

In another analysis by Glassnode, the surge in exchange volumes brings to light a noteworthy trend: the average size of deposits to exchanges has significantly increased, approaching the previous all-time high of $30,000 per deposit. This trend indicates that exchange deposits are predominantly composed of large sums, suggesting a shift towards institutional-level investments. This observation could be indicative of escalating institutional interest, particularly as critical ETF decision dates loom in January 2024. This pattern reflects the growing participation of institutional investors in the cryptocurrency market and the potential impact of upcoming regulatory decisions of the SEC on market dynamics.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH rose to 55.30% and 57.52%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC fell to 2.71% while ETH remained flat at 4.46%.
  • The futures market witnessed $246.85M liquidations, with shorts representing 65.8%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

29.19%

BNB

Bybit

OKX

28.73%

DOGE

Binance

dYdX

24.95%

SOL

Binance

dYdX

Source: @CexyArbBot Telegram Bot

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.

The 30-day implied volatility (IV) has increased to 52.14%, suggesting that the market expects more significant price fluctuations in the near term, contrary to the usual trend where IV drops as prices rise. Conversely, the 7-day IV has slightly increased to 52.51%, indicating a short-term expectation of volatility.

The term structure of BTC is maintaining a contango pattern. IVs across various tenors have remained relatively unchanged from the previous day, with the exception of 51 to 79 day expiries, which saw a dip in IV.

The decrease in the 25-delta 30-day call-put skew to 3.41% suggests that the demand for protective put options relative to call options has increased, indicating an increase in bearish sentiment among traders for the mid-term. Similarly, the decrease in the 7-day skew to 2.75% implies an immediate concern for downside risk. This shift towards increased hedging activity suggests that traders are also securing their gains made in the recent rally.

During @Paradigm’s US Session Hours, highlighted option flows this week, emphasizing downside coverage with strategic put purchases and structured positions. The market's attention is currently drawn to January options, indicating a particular interest in upside potential as the next focal point. Key BTC trades encompassed the procurement of 2375x 26-Jan-24 42/50K Call Spreads and 801x 15-Dec-23 41/37K Put Spreads, both bought. Noteworthy ETH transactions included the purchase of 8700x 15-Dec-23 2100/1900 Put Spreads and 8000x 22-Dec-23 2000/1800 Put Spreads, indicating a protective stance.

Crypto Technical Analysis

Turning to technical analysis, BTC has surged once again with the opening of the US market, reaching the $44K level, a peak not seen since March 2022. It briefly touched $45K on Coinbase, positioning this as the next immediate resistance. The RSI has also stayed elevated for an extended duration, currently at 81.00 on the 4-hour chart, signaling an extremely overbought condition. Conversely, a short-term reversal remains plausible as short-term holders profit from their positions, potentially prompting a retracement to the previous resistance zone at $42K.

Although somewhat more subdued, ETH has undergone a rapid surge in the last 24 hours, mirroring the movement seen in BTC. Despite briefly returning to normal ranges, the RSI has largely remained in overbought territory. Interestingly, despite the continuous pumps in recent days, there is no clear resistance in the immediate future, signaling a highly bullish scenario. If ETH encounters retracements in the event of a short-term reversal, the price could potentially move towards $2.11K, representing a robust support at the intersection of the horizontal channel's upper boundary, the support formed by the previous high in April, and the lower trendline formed by the local higher lows.

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