🌳 US Q1 GDP Growth Revised Up While Consumer Spending Disappoints; VanEck Files for Solana ETF

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• US Q1 GDP growth revised up to 1.4% while that of consumer spending dropped to 1.5%; IMF launches critical evaluation of the US economy (More in Macro & TradFi)
• VanEck files for first U.S. SOL ETF; Coinbase sues SEC and FDIC (More in DeFi & CeFi)
• Bitmex exchange reserve inversely correlates with ETH price; Data shows BTC accumulation in shrimps and whales (More in On-Chain)
• 7-day and 30-day ATM IVs and 25-delta skews exhibit continued divergence; Mark IVs maintain contango shape (More in Crypto Derivatives)
• BTC forms crucial support; ETH RSI approaching oversold zone (More in Crypto Technical Analysis)

Macro & TradFi

The latest GDP data showed that the U.S. economy expanded at a revised rate of 1.4% in the first quarter of the year, slightly up from earlier estimates but marking its slowest growth in nearly two years. Consumer spending, a critical driver, increased at a disappointing 1.5% annual rate, down from previous quarters. Government spending rose to 1.8%, boosted by local and state outlays. Looking ahead, forecasts anticipate a modest acceleration to around 2% in the second quarter, contingent on economic conditions and potential Federal Reserve interest rate cuts aimed at spurring growth amid persistent inflation. 

Elsewhere, the International Monetary Fund (IMF) issued a critical evaluation of the U.S. economy, highlighting concerns over large deficits, escalating debt levels, and aggressive trade policies. Despite acknowledging the economy as robust and dynamic, the IMF slightly downgraded its growth forecast for the year to 2.6%, citing unsustainable fiscal deficits that are driving up the public debt-to-GDP ratio. The IMF also flagged risks from ongoing trade restrictions and insufficient progress in addressing vulnerabilities exposed by recent bank failures. It recommended the U.S. adopt international financial stability measures and urged fiscal reforms to reverse the growing debt burden, projecting government debt could exceed 140% of GDP by 2032 under current policies. IMF Managing Director Kristalina Georgieva underscored the importance of reducing debt and suggested the Federal Reserve maintain interest rates until at least late 2024 to support economic stability amid signs of a slowdown and easing inflation pressures.

On Thursday, the U.S. stock markets experienced a mixed session characterized by slight gains amid sectoral disparities. The Nasdaq Composite rose by 0.3%, while the Dow Jones Industrial Average and the S&P 500 each edged up by 0.1%. The tech sector, despite semiconductor test results indicating increased vulnerability to severe economic conditions. Treasury yields declined after employment and GDP data met expectations, weakness led by Nvidia and Micron Technology due to the latter's disappointing earnings and revenue forecast contributed to the Nasdaq's advance. Conversely, financial stocks underperformed following the Federal Reserve's stress while anticipation built for upcoming inflation figures. Investors will be looking out for the US Core PCE Price Index, the Fed's preferred inflation gauge, due tonight at 20:30 SGT.

DeFi & CeFi

• VanEck Files for Solana ETF
• Coinbase sues SEC, FDIC over FOIA requests, says federal regulators trying to cut out crypto
• State Street, Galaxy Digital to develop active crypto trading products
• Julian Assange received $500K Bitcoin donation from anonymous Bitcoin whale
• Zerion deploys testnet for Layer 2 rollup developed using ZK Stack
• Covalent Network announces the completion of a $5 million strategic funding round

VanEck has filed for the first SOL ETF in the U.S., just six days after a similar filing in Canada by 3iQ. This S-1 registration with the SEC propelled SOL's price by nearly 8% in 24 hours, while the broader crypto market, as measured by the CoinDesk 20 Index, rose 1.8%. VanEck, known for pioneering moves in the ETF space, argues that SOL's functionality as a digital commodity akin to Bitcoin and Ethereum justifies its ETF. Experts predict the approval of ETH ETFs could lead to substantial market inflows and position SOL as the next candidate for such financial products, though significant regulatory discussions may not occur until 2025.

In other news, Coinbase has filed lawsuits against the SEC and FDIC in the U.S. District Court for the District of Columbia, accusing the regulators of failing to comply with Freedom of Information Act (FOIA) requests. The crypto exchange, assisted by consultant firm History Associates Inc., alleges that federal financial regulators are attempting to isolate the crypto industry from the banking sector. Coinbase specifically seeks information on the SEC’s views on Ethereum and related investigations, as well as the FDIC’s “pause letters” which purportedly aimed to halt crypto-related activities of financial institutions. Coinbase argues that these actions are part of a broader effort to stifle the digital asset industry.

On-Chain

In today’s on-chain analysis from CryptoQuant, we observe the significance of Bitmex exchange reserves and the roles whereby whales who utilize their platform play in affecting Ethereum reserves and Ethereum price. On-chain analysis suggests that noticeable decreases in the price of ETH are followed by an increase in ETH reserves. Conversely, a stark decline in Bitmex exchange ETH reserves is followed by an increase in ETH price. The inverse relationship between ETH’s price and Bitmex exchange reserve suggests that Bitmex has some pricing power in the crypto market, and their exchange reserves could be an indicator for traders.

Another analysis by CryptoQuant on BTC accumulation and market behavior highlighted that different cohorts of Bitcoin holders accumulate or distribute their coins. Values close to 1 (in green) indicate accumulation, while values close to 0 (in red) indicate distribution. Recently, addresses holding between 1 to 10K BTC have been selling their coins at near all-time high prices, suggesting profit-taking behavior. In contrast, addresses holding less than 1 BTC have shown consistent accumulation, reflecting a strong belief in Bitcoin's long-term value. Additionally, addresses holding more than 10K BTC have also shown recent accumulation. This suggests that both large whales and retail investors are leading the charge in buying more crypto during the dip.

Derivatives

• Funding rates remained positive for BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH remained relatively flat at 47.71% and 61.51% respectively.
• The 30-day 25-delta skew (C-P) for BTC dropped to -0.02 while that of ETH rose to 4.83.
• The futures market witnessed $71.11M, with longs representing 60.91%.

The 7-day ATM IV for BTC exhibits a slight decline, continuing its divergence from the steadier 30-day ATM IV, which remains relatively flat. This suggests short-term volatility expectations have decreased, possibly due to the market’s resolution of recent price action. Meanwhile, the 30-day ATM IV's stability indicates that medium-term expectations are holding steady, with traders possibly viewing the recent price action as an isolated event.

Meanwhile, BTC Shadow Term Structure maintains its contango shape with Mark IVs showing minimal variances from yesterday’s.

BTC's 25-delta skews display a continued divergence between the short-term and longer-term skews, with the 7-day skew exhibiting more pronounced fluctuations compared to the more stable longer-term 30-day skew. This divergence, however, has been narrowing in the past few days, indicating a potentially aligning short-term and medium-term market outlook.

Lastly, @Paradigm’s option flows highlighted notable BTC trades that included the sale of a custom spread involving 250 contracts with July 19, 2024, strikes at $63K and $67K, and the sale of 100 September 27, 2024, $60K Puts. For ETH, significant trades were executed with the purchase of 15,000 July 26, 2024, $4.2K Calls, and 3,000 July 12, 2024, $3.9K Calls, alongside a transaction involving 1,000 June 28, 2024 / July 26, 2024, $3.4K Call Calendars being sold.

Crypto Technical Analysis

Moving on to technical analysis, BTC’s price is positioned around $61.9K, rebounding after touching the support level of $60.7K. This suggests that this range between $60.7K and $59.7K could be a crucial support level in the near term. Conversely, the nearest resistance level is at $64.5K, indicating a potential rise of approximately 4.2% from the current price levels. RSI level indicates that market sentiment is neutral and price movement can move in either direction moving forward.

ETH is currently hovering around $3.4K, with recent bullish candle activity moving the price closer to the resistance level of $3.6K, a 5.8% appreciation. Should the price action break past this level, the subsequent resistance level is present at $3.8K. Conversely, if the market were to turn bearish, ETH would find support at $3.2K, indicating a downside of 5.8%. The RSI is positioned at 60.76, which is approaching overbought territory, suggesting that the asset may be nearing a reversal point or a period of consolidation.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• First-quarter GDP grew a soft 1.4%, but the U.S. economy might have more ‘spring’ in its step

• IMF Blasts US for Risky Deficits, Debt, Trade and Bank Rules

• Nike shares plunge after retailer says quarterly sales will fall 10%, warns on China weakness

• AeroVironment CEO describes how drones are the future of modern warfare

• Tesla loses its EV quality edge as repair problems continue to plague the market

• Drug prices have risen almost 40% over the past decade, according to GoodRx

• U.S. needs major nuclear expansion to meet energy demand: Southern Company CEO

• Center for Investigative Reporting sues OpenAI, Microsoft, bolstering attack on AI

• Rivian investor day focuses on cost reductions, efficiencies and next-gen EVs

• Chewy stock pops 34% after Roaring Kitty posts a dog picture

• US in talks to send Israel’s Patriot systems to Ukraine

• EU leaders endorse second term for von der Leyen as bloc’s top official

• US Supreme Court rejects plan to shield Sacklers in Purdue bankruptcy

Crypto

• VanEck Files for Solana ETF, SOL Rises 8%

• Coinbase sues SEC, FDIC over FOIA noncompliance

• State Street, Galaxy Digital to Develop Active Crypto Trading Products

• Solana ETF possible with a change in POTUS, SEC: Balchunas

• Coinbase and payment processor Stripe form partnership for onboarding

• S&P Global joins Singapore's Project Guardian tokenization trials

• OpenAI inks deal with Time while facing added lawsuit from news nonprofit

• Coinbase global adviser to join President Biden’s reelection campaign

• Paradigm calls on European markets regulator to show nuance regarding MEV

• Tron network deposits drop to 6-month low as TRX price rallies — Trouble in paradise?

• Coinbase ‘not aware’ of any customer data breach after Au10tix credential leak

• Binance to remove prime brokerage loophole

• US Fed CIO says it’s ‘hard to justify’ hiring human coders over AI

• Chainlink data streams go live on Avalanche Network

Deal Flow

• Vitalik Buterin backs new blockchain MegaETH as it raises $20 million at '9-figure' token valuation

• CleanSpark acquires GRIID for $155M stock transaction

Yours sincerely,
Treehouse Research 🌳