BTC

ETH

S&P Futures 500

$68,011.81

$3,819.06

$5,190.50

(+1.22%)

 (-2.40%)

(-0.67%)

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

GM Treehouser 🌳

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February 2024 Market Recap

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Our Daily View

What We Are Covering Today

  • US job market accelerates amid rate cut speculations; China sees consumer price rise (More in Macro & TradFi)
  • BlackRock embraces bitcoin ETPs for funds; Goldman Sachs upgrades Coinbase amid crypto surge (More in DeFi & CeFi)
  • Whales accumulate Pandora; Tether Treasury minted 2B $USDT (More in On-Chain)
  • BTC increases sharply in IVs and C-P skews while its terms structure is in a backwardation state (More in Crypto Derivatives)
  • BTC continues to oscillate within a tight range while ETH sees a potential reversal in momentum (More in Crypto Technical Analysis)

Macro & TradFi

In February, the US job market experienced a notable acceleration, with nonfarm payrolls increasing by 275,000 jobs last month. This surpassed expectations despite downward revisions to previous months and an unemployment rate climbing to a two-year peak of 3.9%. This mixed report suggests a decelerating labor market, yet it still supports the broader economy, which remains robust compared to its global counterparts. The slowdown in wage growth, coupled with these job market dynamics, has heightened expectations that the Federal Reserve might initiate interest rate cuts by mid-year, aiming to navigate the economy through its current phase. This development is significant as it reflects a cautious but necessary adjustment in monetary policy in response to evolving economic indicators, amidst a landscape where sectors like healthcare and government show strong employment gains, yet manufacturing and temporary help services see declines.

In other news, China experienced a notable uptick in consumer price growth, registering a 0.7% year-on-year increase, surpassing the 0.3% prediction by economists. This marked the first rise in consumer prices in six months, attributed to seasonal spending during the Lunar New Year, signaling a temporary uplift in the nation's struggling consumer sentiment. Despite this, the economy faces persistent challenges, as evidenced by a continued decline in factory-gate prices and weak domestic demand. The government's ambitious growth targets and potential monetary easing measures highlight the urgency to stimulate economic activity and consumer confidence, yet the path to sustained recovery remains fraught with uncertainties.

Last Friday, the US stock market experienced a downturn, with the S&P 500 declining by 0.65%, the Dow Jones Industrial Average by 0.18%, and the Nasdaq by 1.53%, amidst speculation of a potential interest rate cut within the year. This drop was primarily driven by a slump in the technology sector, notably due to disappointing semiconductor earnings, causing the S&P 500 to break a two-week winning streak. Notably, Nvidia's shares fell by 5.55%, ending its six-day rally, while Marvell's shares plummeted by 11.36% following weak Q1 revenue guidance attributed to diminished demand across its wireless infrastructure, enterprise, and consumer markets. The market's focus is now squarely on the upcoming US CPI data release on Tuesday, 12 March, at 20:30 SGT, as a further reduction in inflation could reinforce the market's dominant narrative of a possible soft landing.

CeFi & DeFi

  • BlackRock plans to acquire spot Bitcoin ETPs
  • Coinbase stock recovers IPO listing price
  • Fed’s Powell allays digital dollar anxiety: ‘Nowhere near’ a CBDC
  • Pantera Raising Fund to Buy up to $250M $SOL
  • BlackRock's Bitcoin ETF holds close to 200K BTC, surpassing MicroStrategy's reserves

BlackRock is set to enhance its investment offerings by acquiring spot bitcoin exchange-traded products (ETPs), including potentially its own iShares Bitcoin Trust (IBIT) product, for its $18 billion AUM Global Allocation Fund. This move follows an earlier filing to include bitcoin ETPs in its $36.7 billion AUM Strategic Income Opportunities Fund, signaling a significant shift towards integrating digital assets into traditional investment portfolios. This strategy reflects a growing recognition of bitcoin's value and potential for diversification, amidst increasing acceptance of cryptocurrencies within the mainstream financial landscape.

Elsewhere, Goldman Sachs has revised its outlook on Coinbase (COIN), shifting its rating from sell to neutral, following a surge in bitcoin prices to record highs and a significant increase in the crypto exchange's trading volumes, reaching levels last observed during the 2021 bull market. The bank's decision is influenced by the robust performance of cryptocurrency prices and Coinbase's strategic focus on achieving more stable profitability. With bitcoin's price exceeding $67,000, Coinbase's daily trading volumes have been reported between $3 billion to $5 billion, largely driven by heightened retail investor participation. This shift reflects the broader market's increasing interest in digital currencies and Coinbase's adept navigation of the crypto landscape, highlighting its ability to capitalize on market dynamics while prioritizing profitability and market share.

On-Chain

According to lookonchain, $21.55M was spent to purchase 994 Pandora tokens at an average price of $21,675 from Feb 10 to Mar 2 across 6 whale wallets. This buying spree has been aligned with significant price surges for Pandora, suggesting whale activities are markedly influencing its market price. Given that Pandora is a nascent token, barely a month old, this pattern indicates a heavily skewed holder distribution, heavily concentrated among these whales. This concentration raises questions about market manipulation and the sustainability of price movements, underlining the importance of vigilance for investors.

In other news, the Tether Treasury minted 2B $USDT yesterday, with 5B $USDT minted on both Tron and Ethereum networks the past week. While this inflow of liquidity could potentially signal the growth of the on-chain ecosystem, minting large amounts of $USDT over a short period suggests that large institutional traders are moving funds on-chain to capitalize on digital assets opportunities, representing a positive future outlook. However, traders should be vigilant amidst such rapid inflows and be cautious while trading.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH increased to 80.03% and 80.15%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC rose sharply to 7.66% while ETH decreased to 3.54%.
  • The futures market witnessed $296.67M in liquidations, with longs representing 74.63%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

35.42%

DOGE

Bybit

dYdX

31.70%

DOGE

OKX

dYdX

22.43%

DOGE

Binance

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.

BTC ATM Implied Volatility (IV) experienced a sharp increase over the weekend as the price of BTC challenged the all-time high at $69K multiple times before retracing. Currently, the 7-day IV sits at 84.75% with the 30-day IV trailing behind at 78.09%.

BTC's term structure shows a more pronounced backwardation, with short-term option contracts of up to 4 days experiencing heightened volatility. This suggests anticipation among traders of breaking above the resistance at $70K. The gentle curve over mid to long-term tenures indicates a stabilization in IVs and the lack of any significant catalyst for traders.

The BTC 25 Delta skews (C-P) increased over the weekend, indicating that option investors may be more optimistic about the outlook of the price of BTC Premium for BTC options contracts skewed to 8.26% for 7-day maturities and 7.60% for 30-day maturities. 

Lastly, during the Asia/EU Trading Session, @Paradigm reported that option flows are predominantly bullish. Some notable trades included the purchase of a 500x 28-Jun-24 $75K BTC Call and a 350x 31-May-24 $85K/$100K Call Spread. On the ETH side, it includes the purchase of 4000x 15-Mar-24 $4.4K Call, 3000x 27-Dec-24 $4K/$6K Call Spread, and 2750x 15-Mar-24 $4.2K Call.

Crypto Technical Analysis

In technical analysis, BTC continues to consolidate within a narrow range below the $69K resistance level. Following a period of stability, the RSI has retreated to the neutral zone at 52.92. Moving forward, traders should closely monitor the $69K to $70K resistance zone for signs of a bullish breakout. Conversely, if bearish sentiment dominates the market, the immediate support level is located at $64.5K, which previously acted as resistance in October 2021. A breach of this level could lead to further downside movement towards the $59K support level, which was observed during the recent flash crash last Wednesday.

Moving on to ETH, the price movements were characterized by narrow consolidations over the weekend, albeit with a slightly bearish tone. This morning, ETH saw a notable decrease in price, bringing it below the $3.8K level. Consequently, the price chart displays an arc pattern at the top, possibly signaling a shift in momentum from bullish to bearish. In the event of a bearish sentiment, immediate support is expected in the range of $3.5K to $3.55K, which corresponds to the resistance-turned-support level from April 2022. Should this support level fail to hold, the next support zone is anticipated between $3.2K to $3.3K, representing a potential downside of 13%. Conversely, if bullish sentiment prevails, the $4K level remains a significant psychological resistance zone, with further bullish momentum likely to materialize only upon a successful breakout above this level.

Access institutional-grade commentary on TradFi × Crypto markets

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