BTC

ETH

S&P Futures 500

$65,071.46

$3,561.93

$5,566.50

(-0.10%)

 (+1.92%)

(+0.09%)

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

GM Treehouser 🌳


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May 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • UK inflation reaches BOE’s 2% target; Fitch postpones forecast for China rate cut (More in Macro & TradFi)
  • CertiK uncovers Kraken exploit and faces threats; Deutsche Telekom enters bitcoin mining (More in DeFi & CeFi)
  • 6,000 BTC outflow from exchanges; Tether market cap reduction in tandem with Bitcoin price drop (More in On-Chain)
  • Both BTC and ETH saw a decline in both ATM IVs and C-P skew with the 7-day BTC skew going into a notable put premium (More in Crypto Derivatives)
  • BTC faces bearish pressure at 65.2K; ETH consolidates between 3.55K and 3.6K (More in Crypto Technical Analysis)

Macro & TradFi

In May, UK inflation reached the Bank of England's 2% target for the first time in nearly three years, dropping from April's 2.3%. However, the Bank is unlikely to cut interest rates soon. Services inflation and wage growth remain above desired levels, with services inflation at 5.7% and wage growth at 6%. While an August rate cut remains possible, policymakers are cautious due to persistent domestic price pressures. 

Meanwhile, Fitch Ratings has postponed its forecast for China's policy rate cut to next year, citing the U.S. Federal Reserve's decision to maintain high interest rates. Fitch now anticipates that China will keep its one-year medium-term lending facility (MLF) at 2.5% this year, with a reduction to 2.25% expected in 2024. This adjustment reflects concerns over the exchange rate against the U.S. dollar and low bank net interest margins. The last MLF rate cut occurred in August 2023, and the People's Bank of China has signaled continued supportive monetary policy.

Lastly, Asian stocks surged to a two-year high, with the MSCI Asia ex-Japan index rising over 1% to its highest level since April 2022. The People's Bank of China is expected to keep its benchmark lending rates unchanged, following a steady medium-term lending facility (MLF) rate earlier this week. Bank Indonesia is anticipated to maintain its key interest rate at 6.25%, influenced by the rupiah's recent slide to four-year lows against the U.S. dollar. New Zealand's Q1 GDP figures are also in focus, with a forecasted 0.1% growth following a 0.1% contraction in the previous quarter. Asian tech shares continued to perform strongly, inspired by Nvidia's success, with Hong Kong's Hang Seng tech index jumping 3.7%. The yen remains stable near lows that recently prompted intervention from Tokyo, with one-month dollar/yen implied volatility at its lowest since April.

DeFi & CeFi

  • CertiK identifies Kraken exploit, claims exchange 'threatened' its team
  • Telecom giant and T-Mobile parent Deutsche Telekom plans to mine bitcoin
  • ZKsync Era's airdrop fails to halt decline in transactions and active addresses
  • Nigerian High Court dismisses Binance exec’s suit over detention
  • Pantera crypto hedge fund to invest $200m in AI

Blockchain security firm CertiK has disclosed its role in identifying an exploit on cryptocurrency exchange Kraken, claiming the exchange responded by threatening its employees. According to CertiK, after informing Kraken of a vulnerability that allowed the removal of $3 million worth of digital assets, Kraken's security team demanded repayment of a mismatched amount within an unreasonable timeframe without providing repayment addresses. CertiK's public disclosure aims to defend its actions and transparency, urging Kraken to halt threats against White Hat hackers. The incident has sparked mixed reactions among crypto users, with some questioning CertiK's motives. CertiK has previously highlighted significant vulnerabilities in platforms like Wormhole bridge on Aptos and Telegram.

Elsewhere, Telecom giant and T-Mobile parent Deutsche Telekom plans to mine bitcoin, as announced by Dirk Röder, Head of Web3 infrastructure and solutions at T-Mobile's Telekom MMS, during the BTC Prague conference. Röder indicated that the company would engage in "digital monetary photosynthesis," confirming their intention to mine bitcoin. This development follows Deutsche Telekom's active involvement in the digital assets sector, where they have operated validators on networks like Polygon, Flow, Celo, Chainlink, and Ethereum. The company also launched the Energy Web Chain, aimed at decentralizing and digitalizing the energy sector. Despite not specifying the scale or location of their mining operations, Röder's announcement has positively impacted the Bitcoin mining community. However, it raises concerns about increased competition for existing miners. Previously, T-Mobile faced lawsuits over "SIM swapping" attacks, highlighting some of the challenges in their Web3 journey.

On-Chain

An analysis by CryptoQuant illustrates a notable outflow of 6,000 bitcoins from derivative exchanges, indicating a significant withdrawal event. This reduction in Bitcoins held on derivative exchanges can signal a potential reversal zone, where the market might shift from a period of high volatility and possible downtrends to a more stable or bullish phase.

In a separate analysis by CryptoQuant on the relationship between Tether's (USDT) market cap changes and Bitcoin prices, it was observed that the reduction in Tether’s market cap may indicate growing risk aversion, with institutional investors potentially withdrawing capital from the market. This decrease mirrors a concurrent drop in Bitcoin's price and for a sustained upward trajectory in Bitcoin, an uptick in Tether's market cap would be essential.

Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC dropped to 44.46% while that of ETH rose to 65.78%.
  • The 30-day 25-delta skew (C-P) for BTC and ETH decreased to 0.30% and 4.37%, respectively.
  • The futures market witnessed $74.62M in liquidations on Monday, with longs representing 50.36%.

Net Annualized APR

Perp (USDT pair)

Long on

Short On

17.55%

ADA

OKX

dYdX

17.35%

ADA

OKX

Bybit

15.68%

AVAX

OKX

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.

The 30-day BTC ATM IV has significantly fallen from a peak of 49.38% to 47.31%. Meanwhile, the 7-day ATM IV has experienced an even steeper decline, dropping from 47.61% to 41.44%. This movement could be attributed to the waning interest of traders due to the lack of developments in the ETH ETFs by the SEC, affecting market activity in the short to medium term.

The term structure for both BTC and ETH continues to exhibit a contango shape, marked by a rise in implied volatility (IV) for near-dated options. However, while BTC's term structure sees minimal changes towards the end of the curve, ETH's term structure has experienced a significant decline in IV for contracts expiring in more than 14 days. This indicates declining interest in the ETH market, likely due to the lack of developments in ETH ETFs.

Following further market declines, the BTC skew chart reveals increasing bearish sentiments, with both the 7-day and 30-day skews continuing to drop. Currently, the 30-day skew sits at 0.30%, near neutral territory, while the 7-day skew has moved into deeper bearish sentiment with a put premium at -1.22. The put premium indicates that the market is cautious of short-term downside risks and is pricing in further declines in the upcoming week.

Lastly, @Paradigm highlighted a market with a significant focus on ETH following news of the SEC closing its investigation on ETH 2.0. During a relatively quiet session for BTC trading, key ETH trades included the purchase of 30,500 27-Sep-24 4000 Call options, the sale of 7,000 28-Jun-24 4000 Call options during the Asia/Europe trading session, and the purchase of 9,000 27-Sep-24 3500/4500 Call spreads.

Crypto Technical Analysis

On BTC’s 4-hour chart, BTC is currently trading at approximately 65.2K, having recently broken down from the key support level of 66K, which has now turned into resistance. The price action shows a continuation of the descending trend line, indicating potential bearish sentiment if the current resistance holds. Should this level be breached again, the next support lies at 61K, representing a fall of around 6.5% from the current price levels. Conversely, resistance is noted at 66.5K, with an immediate downtrend line acting as a potential barrier. The RSI is at 44.63 and trending sideways, indicating a lack of strong momentum in either direction.

ETH on the 4-hour chart is currently trading at approximately 3.57K, having been hovering between the ranges of 3.55K and 3.6K. The price action shows consolidation within this range after a recent attempt to break past the resistance zone around 3.7K. If ETH manages to breach the upper boundary of this consolidation range, the next significant resistance lies at 3.9K, indicating a potential rise of approximately 9% from the current levels. Conversely, if the price fails to hold this range, support is observed around 3.3K.

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