🌳 U.S. Treasuries Slide After Stronger Than Expected Job Growth; SEC Appeals Ripple Ruling

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Our Daily View

What We Are Covering Today

• U.S. treasuries slide after stronger than expected job growth; OpenAI closes funding round at $157B valuation (More in Macro & TradFi)
• SEC appeals Ripple ruling; FTX Auctions $38M in Worldcoin Tokens (More in DeFi & CeFi)
• New BTC whale wallets showing marginal gains (More in On-Chain)
• Bitcoin ATM IV decreased despite geopolitical tensions; Skew divergence reflects mixed sentiment amid upcoming U.S. data (More in Crypto Derivatives)
• BTC maintains yesterday’s level while ETH drops further, trending towards the local low (More in Crypto Technical Analysis)

Macro & TradFi

U.S. Treasuries slid after private payroll data revealed stronger-than-expected job growth, complicating the outlook for interest rate cuts by the Federal Reserve. The 10-year Treasury yield rose 5 basis points to 3.78%, reversing gains from a flight to safety earlier in the week following Iran’s missile attack on Israel. Strong labor market data, including the ADP report and recent job openings figures, suggest that the economy remains resilient, which could limit the need for aggressive Fed rate cuts. Traders are now pricing in about a 33% chance of a half-point rate cut in November and expect further reductions by year-end, though the strength of the economy, evidenced by a projected 2.5% GDP growth rate, may dampen the scope for easing. 

Elsewhere, OpenAI raised $6.6 billion in a funding round led by Thrive Capital, valuing the company at $157 billion, with participation from Microsoft, Nvidia, and SoftBank. The funding will help OpenAI expand its AI research and computing capacity as it continues rapid growth following the success of ChatGPT, which now has 250 million weekly users. Despite its revenue growth, expected to hit $11.6 billion in 2025, OpenAI faces significant costs, including GPU purchases, and expects to lose $5 billion this year. Key executives have recently departed amid discussions of potential company restructuring.

Lastly, on Wednesday, U.S. stock indexes posted slight gains, recovering from the sharp losses on Tuesday as chip stocks rebounded. The Dow Jones Industrial Average and Nasdaq Composite both added 0.1%, while the S&P 500 rose 0.01%. This recovery was driven by Nvidia, which gained 1.6%, helping lift the broader semiconductor sector, with the VanEck Semiconductor ETF rising 1.4%. Among other major tech stocks, Apple appreciated, but Microsoft, Meta Platforms, Amazon, and Alphabet lost ground. Tesla was one of the day’s notable decliners, dropping 3.5% after its quarterly delivery numbers fell short of Wall Street's optimistic expectations. Nike also fell sharply, down 6.8%, after withdrawing its full-year outlook and postponing its investor day due to an upcoming leadership transition. Crude oil prices continued to climb, gaining nearly 2% amid growing concerns about supply disruptions following reports that Iran launched missiles into Israel, escalating tensions in the Middle East. Investors are now focusing on the September unemployment rate and seasonally adjusted non-farm payrolls on 4 October as they await signals on how aggressive the Federal Reserve will be in further cutting interest rates. Additionally, the recent port strike along the U.S. East Coast and Gulf of Mexico could impact inflation and labor market conditions, both key metrics for the Fed's decision-making.

DeFi & CeFi

• SEC appeals Ripple case ruling
• FTX prepares to sell $38M of locked WLD
• Canton Network tokenizes gold, Eurobonds, gilts
• Franklin Templeton adds Aptos to tokenized Treasuries fund
• Tron posts record $577M revenue in Q3

The SEC has appealed a recent ruling from the U.S. Court of Appeals in its case against Ripple, arguing the decision contradicts established Supreme Court precedent and securities laws. The appeal follows a partial victory for Ripple in 2023, where a judge ruled that its programmatic XRP sales did not violate securities laws, though direct sales to institutional investors did. Ripple CEO Brad Garlinghouse criticized the SEC's move, asserting that XRP’s status as a non-security remains intact despite the ongoing legal battle. The case, which began in 2020, revolves around whether Ripple’s sale of XRP constituted unregistered securities offerings.

Elsewhere, the FTX estate is auctioning 22.3 million locked Worldcoin (WLD) tokens, valued at approximately $37.7 million, to recover funds for creditors. The tokens, which unlock daily through 2028, are being offered at a steep discount of 40% to 75% off the current market price. Bids are due by Wednesday evening, and buyers will be notified if successful by Thursday. The FTX estate has previously sold assets like Solana and Metaplex tokens, and with most of its holdings liquidated, it retains around $594 million in assets, though much of this is tied up in its illiquid FTT token. 

On-Chain

According to an on-chain analysis by CryptoQuant, recent whale activity reveals that new whale wallets, including custodial wallets and ETF-related entities, have yet to see significant profits, with most showing only a marginal gain of around 1%. These new whales have been aggressively accumulating Bitcoin, primarily through OTC markets, with little correlation to ETF inflows. Meanwhile, older whales also have not experienced high returns, and as a result, large-scale sell-offs are unlikely until retail liquidity starts flowing into the market. The data suggests that these whales are holding their positions and are not dumping on exchanges, reinforcing the idea that the current market volatility is driven more by futures trading than by spot trading.

Derivatives

• Funding rates for both BTC and ETH remained positive. 
• Deribit Implied Volatility Index (DVOL) for BTC remained flat at 56.25% while that of ETH has declined to 62.68%.
• The 30-day 25-delta skew (C-P) for BTC rose to 1.08 while ETH dropped to -0.72.
• The futures market witnessed $241.19M in liquidations in the last 24 hours, with longs representing 75.00%.

BTC ATM IV has decreased, despite heightened geopolitical tensions following Iran's missile launch at Israel. The 30-day IV remains elevated at 52.79, reflecting ongoing uncertainty and the potential for longer-term market disruptions. In contrast, the 7-day IV has dropped to 47.86, indicating a short-term reduction in perceived risk. 

BTC's term structure continues to show backwardation, particularly in the front end of the curve, with a fall in IV across all tenors. This likely stems from Put buyers exercising their positions early, capitalizing on favorable market conditions, or locking in profits as spot prices decrease. 

The 30-day call-put skew has recovered to 1.08, while the 7-day skew remains negative at -1.86, reflecting a divergence in market sentiment over different time horizons. This divergence could be attributed to the uncertainty surrounding key U.S. economic data releases later in the week, such as Jobless Claims and Nonfarm Payrolls, leading to a more cautious outlook for the 7-day period. 

Lastly, @Paradigm highlighted a trading session in which the overall sentiment appears slightly mixed but leans bearish due to the presence of downside-focused strategies. Key BTC trades included the procurement of 462x 25-Oct-24 $70K Calls and the sale of 362x 25-Oct-24 $57K/$67K Bull Risk Reversals. For ETH, notable trades involved the sale of 15,000x 11-Oct-24 $2.5K Calls and 1,750x 8-Nov-24 $2.4K Calls.

Crypto Technical Analysis

Moving on to technical analysis, BTC has maintained its price level from yesterday, with no significant changes to the technical indicators. Consequently, the price continues to be supported by the 200-period SMA on the 4-hour chart, with the next support level near $58K and resistance at the $64K level. The RSI has recovered slightly and is now out of oversold territory, although it remains in the lower range. This suggests that selling pressures may have been exhausted, and a price correction could be forthcoming in the near term.

On the other hand, ETH has experienced another bearish leg down, breaking below the $2.45K support and continuing to trend downward. As a result, the $2.45K level has now become immediate resistance. If the bearish momentum persists, the next support may be found at $2.27K, which is close to the local low. Meanwhile, the RSI remains in oversold territory, indicating strong bearish sentiment in the market.

Access institutional-grade commentary on TradFi × Crypto markets

By TRHX Research

Daily Readings

TradFi

• Oil rises as Middle East conflict deepens, gains capped by global supply outlook

• Dollar hits one-month peak to yen as Fed seen taking time with rate cuts

• Japan's service sector expands for third month, but confidence dips, PMI shows

• PM Ishiba says Japan not ready for rate hike after meeting BOJ governor

• Gold rally cools as traders eye Mideast developments, US data

• S&P 500 ends near flat as more jobs data awaited; eyes on Middle East

• OpenAI closes funding at $157 billion valuation, as Nvidia signs on as investor

• Tesla’s First Quarterly Sales Gain This Year Comes Up Short

• Israel retaliation may target Iran oil infrastructure, Wall Street analysts say

• OpenAI asks investors not to back rival start-ups such as Musk’s xAI

• DoJ accuses Trump of ‘private criminal effort’ to overturn 2020 election

• US and G7 warn Israel against strikes on Iranian nuclear facilities

• Trump touts fossil fuel agenda in bid for cash from Texas oil donors

Crypto

• Tron Network posts record $577M revenue in Q3

• SEC files appeal in Ripple lawsuit

• FTX bankruptcy estate auctioning Worldcoin tokens this week

• SEC enforcement chief Grewal to step down

• Court revives 2020 AT&T case over $24M crypto theft via SIM swap

• US appeals court greenlights election prediction markets

• Digital Asset’s Canton Network tokenizes gold, Eurobonds, gilts

• Tokenized funds get preliminary approval to be used as collateral in the US

• CFTC loses appeal as US court greenlights prediction markets involving elections in Kalshi case

• Bitwise seeks approval for first spot XRP ETF despite regulatory uncertainty

• Franklin Templeton adds Aptos to tokenized Treasuries fund

• Telegram CEO confirms sharing criminals’ IP addresses with authorities since 2018

• Australian police seize $6.4 million in crypto after ‘deciphering’ wallet seed phrase

Yours sincerely,
TRHX Research (Formerly Treehouse Research) 🌳