BTC

ETH

S&P Futures 500

$26,229.25

$1,579.50

$4,365.25

(-1.54%)

 (-0.73%)

(-0.14%)

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

GM Treehouser 🌳

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August 2023 Market Recap

Our Daily View

What We Are Covering Today

  • US-Chinese working groups established; China braces for 21 million travelers in wake of the Golden Week Holiday (more in Macro & TradFi)
  • Coinbase hasn’t ruled out the possibility of a Base token; Bitcoin miners double down on sustainability efforts at World Digital Mining Summit (more in DeFi & CeFi)
  • Ethereum’s network fees drop to $1.15 average per transaction, lowest of 2023; $CREAM surges 50%, as data reveals pronounced activity from Machibigbrother (more in On-Chain)
  • Options market shows subdued BTC volatilities; Paradigm reports diverse, bearish-tilted trades (more in Crypto Derivatives)
  • Both BTC and ETH plunge before the Asian trading session on Monday only to recover sharply above key support levels (Crypto Technical Analysis)

Macro & TradFi

In an effort to stabilize the tumultuous US-China relationship, Washington and Beijing have initiated two working groups to address pressing economic and financial challenges. Overseen by US Treasury Secretary Janet Yellen and Chinese Vice-Premier He Lifeng, the establishment of these groups marks a significant advancement in bilateral ties and offers platforms to articulate America's interests and foster constructive economic competition. This move comes on the heels of recent high-level interactions, including secret meetings between US and Chinese officials and US Commerce Secretary Gina Raimondo's trip to China, which laid the groundwork for additional dialogue channels. Furthermore, amid positive expectations for bilateral relations from Beijing, officials from both nations are deliberating a potential in-person meeting at the upcoming Asia Pacific Economic Cooperation summit. Concurrently, the Biden administration remains vigilant of recent political shifts within China, evident from notable personnel changes in its government and military sectors.

Moving on, China's travel industry is set for a significant boost as the Golden Week holiday, combining the Mid-Autumn festival and the National Day break, is expected to see over 21 million individuals flying within an eight-day span. This surge in demand, reminiscent of nearly the entire population of Australia taking to the skies, has been met with a dramatic increase in airfares, especially on popular routes. This renewed vigor in the travel sector has uplifted China's air passenger traffic to peak levels in recent months, providing a much-needed respite to major airlines that suffered extensive losses during the pandemic.

U.S. equities tumbled on Friday, as the S&P 500, NASDAQ Composite, and DJIA fell by 0.23%, 0.09%, and 0.31%, respectively. As the debt ceiling conflict intensifies, this has amplified risk for US assets, especially as bonds and stocks decline following the Federal Reserve's hawkish stance. Asian equities are also bracing for a measured start, as the Japanese Nikkei held steady at a 0.02% decline.

DeFi & CeFi

  • Coinbase hasn’t ruled out the possibility of a Base token
  • Bitcoin miners double down on efficiency and renewable energy at the World Digital Mining Summit
  • Base surges past Solana as total value locked nears $400M
  • Google Cloud adds 11 blockchains to data warehouse ‘BigQuery’
  • Terra Classic community decides to stop minting $USTC in effort to re-peg $USTC to USD
  • Apecoin DAO passed proposal to purchase Yuga Assets with 11M $APE and to issue $DAM Token

Brian Grewal, the chief legal officer of Coinbase, stated in an interview with Decrypt that Coinbase hasn’t ruled out the possibility of launching its own token. Amid broader discussions of the demarcation between CEXs and DEXs and regulatory controversy, Grewal mentioned that a Coinbase token was “not something we’ve ruled out entirely”. He elaborated on Coinbase’s priority, which remains to create tools and technology that encourage innovation and creativity from the crypto community, and that public recognition and humility as an organization continue to be the primary drivers of their effort. Grewal explained that Coinbase focuses on providing opportunities for experimentation rather than trying to create the most compelling product, and alluded to a current discouraging atmosphere in the crypto space due to theories the SEC has promoted.

In other news, prolific Bitcoin mining circuit chip designer Bitmain unveiled its next-generation Antminer S21 and S21 Hydro Application-Specific Integrated Circuit (ASIC) miners at the World Digital Mining Summit (WDMS) in Hong Kong. The Antminer S21 offers a hash rate of 200 terahashes per second (TH/s) with an efficiency of 17.5 joules per terahash (J/T), while the S21 Hydro hashes at 335 TH/s and 16 J/T. This improved efficiency is crucial for miners as electricity costs rise and the Bitcoin halving approaches in April 2024, cutting block rewards in half. In order to maintain profitability, miners will need to use more renewable energy or enhance ASIC efficiency.

On-Chain

According to @santimentfeed, Ethereum's network fees have plummeted to their lowest mark for 2023, standing at a mere $1.15 average per transaction. Historically, such fee reductions have been precursors to heightened utility, as the transaction affordability with $ETH improves. This rise in utility, if patterns hold, could potentially signal an impending resurgence in Ethereum's market capitalization, but investors should still be mindful that current levels are also attributed to chronic low volume and activity.

According to @lookonchain, $CREAM has registered an impressive 50% price surge over the last 3 days. More intriguing was the movement by notable figure Machi Big Brother, who withdrew a staggering 215,236 $CREAM, equivalent to $4.04M, before immediately re-staking, suggesting sustained bullish sentiment on $CREAM.

Crypto Derivatives

  • Funding rate steadies at positive for both BTC and ETH
  • Deribit Implied Volatility Index (DVOL) for BTC steadies at 39.26% while it retreated on ETH to 39.26%
  • 30-day 25-delta skew (C-P) on both BTC and ETH plunged to -1.05% and -4.64%, respectively
  • The futures market witnessed $68.18M worth of liquidations in the last 24 hours, with longs representing 80.87% of the total

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

11.61%

ETH

dYdX

Bybit

11.52%

BNB

Bybit

Binance

11.28%

XRP

OKX

Bybit

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.

In the options market, despite a dip in the spot price below $27K, both 7-day and 30-day implied volatilities (IV) on BTC have remained subdued. This is possibly caused by the US GDP data release on 28 September, Thursday, at 20:30 SGT, where the forecast is for the economy to grow to 2.1%.

Meanwhile, the term structure of BTC remains in contango without any significant changes, with a slightly elevated front end possibly from Washington and Beijing forming working groups to discuss economic and financial issues.

Elsewhere, the 30-day 25 delta (C-P) skew on BTC decreased to -1.05. Similarly, the 30-day skew on ETH has become even more negative at -4.64%, indicating a near-term bearish sentiment for both major cryptocurrencies.

Lastly, @Paradigm highlighted diverse trading activities despite the market's bearish tilt. Key BTC transactions feature the acquisition of 1300x 27-Oct-23 $30K / 24-Nov-23 $33K call calendar options and the purchase of 1000x 29-Sep-23 $30K call options. On the ETH front, significant trades encompass the procurement of 4000x 6-Oct-23 $1.55K put options and the sale of 4000x 24-Nov-23 $1.8K call options.

Crypto Technical Analysis

Moving on to TA, BTC has remained within a narrow price range over the weekend, holding steady at around $26.5K. Interestingly, just before the Asian trading session kicked off on Monday, BTC experienced a decline of approximately 2.21%. It briefly slipped below the $26K handle but quickly found substantial support, rebounding as the Asian trading session commenced. BTC will need to establish itself above the $26.58K mark, which was the point where its recent decline began. Failing to do so could indicate a potential downward trajectory, possibly retracing back to the $25K level, a level it previously tested on September 12, 2023.

Likewise, ETH stayed within a narrow range during the weekend but then experienced a 1.8% decline just before the Asian trading session on Monday. ETH briefly fell below its $1.58K support level but promptly recovered above it. If ETH continues on this downward path, it may revisit its quarterly lows of $1.54K. Conversely, ETH should strive to maintain its current support level and aim for a retest of $1.64K, its opening price in September.

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