BTC

ETH

S&P Futures 500

$68,612.59

$3,329.86

$5,201.00

(+3.55%)

 (+0.08%)

(-1.45%)

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

GM Treehouser 🌳

Welcome to our Treehouse Daily newsletter, where Treehouse brings you financial news and insights free daily! We believe you’ll find this helpful.

Also, in case you have missed it, check out our latest research piece 👇

March 2024 Market Recap

You can also access our research articles on the Bloomberg Terminal with the command “NH TRH < GO >"!

Our Daily View

What We Are Covering Today

  • US weekly jobless claims at two-month high; The European Central Bank (ECB) stated its intention to chart an independent course and initiate interest rate reductions (More in Macro & TradFi)
  • Ripple launches US-backed stablecoin; Ethereum's decentralization eases security classification concerns (More in DeFi & CeFi)
  • Tether Treasury minted another $1B USDT; Correlation between US Government’s Silk Road transfers and Bitcoin’s local bottom (More in On-Chain)
  • 30-day 25-delta skew for BTC and ETH continues to drop; IVs point towards market waiting out for BTC halving (More in Crypto Derivatives)
  • BTC moves up to the new $68K resistance zone while ETH moves sideways (More in Crypto Technical Analysis)

Macro & TradFi

Data released by the Labor Department on Thursday, April 4th, indicated an increase in new unemployment benefit claims filed by Americans. This rise represents a two-month high and suggests a gradual shift towards less accommodative labor market conditions. However, the report also revealed a decrease in individuals continuing unemployment benefits by the end of March. This finding implies that laid-off workers are still securing employment opportunities, albeit at a slower pace compared to the past two years. Though layoffs increased to a 14-month high in March, job cuts were little changed compared to the same period last year. During a public address on Wednesday, Jerome Powell emphasized that the central bank possesses ample time to carefully consider its initial interest rate reduction, and by keeping rates high, the US is at risk of higher unemployment. This stance acknowledges the current economic resilience alongside persistent inflationary pressures.

Elsewhere, the European Central Bank (ECB) stated its intention to chart an independent course and initiate interest rate reductions ahead of the Federal Reserve. However, developments within the United States may still significantly influence the ECB's subsequent policy trajectory. As European Central Bank (ECB) officials convene next week to deliberate on the timing, pace, and magnitude of scaling back their current tightening monetary policy, they will undoubtedly maintain a watchful eye on developments in the United States, despite their emphasis on pursuing an independent course of action. In anticipation of easing price pressures, policymakers led by President Christine Lagarde have initiated efforts to prepare markets for an initial interest rate reduction on June 6th. While they have emphatically rejected any suggestion of mirroring the actions of Federal Reserve Chair Jerome Powell, the extent of subsequent policy adjustments remains undetermined. The ECB emphasizes that future decisions will be guided by forthcoming economic data.

The Dow, S&P 500, and Nasdaq closed at a decline of 1.35%, 1.23%, and 1.40% respectively, amidst a backdrop of inflationary pressures, climbing oil prices, and anticipation for the monthly jobs report. On the corporate front, notable moves included Lamb Weston's stock plunging by 19.37% after posting soft results for the third quarter of fiscal 2024, following which it lowered its guidance for the fiscal. Furthermore, Paramount Global, a mass media corporation, experienced an 8.51% share decline after buyout rumors and declining revenue. Investors will be looking out for the Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings data due later in the evening, at 20:30 SGT.

CeFi & DeFi

  • Ripple to launch US dollar stablecoin, aims to compete with USDT and USDC
  • Morgan Stanley wants to beat UBS to become the first Bitcoin ETF bank
  • Ethena Labs adds Bitcoin backing to its USDe synthetic dollar
  • Bitcoin Cash experiences second-ever halving event
  • Coinbase says Canadian license makes it country's biggest registered crypto exchange
  • JPMorgan says Ether could avoid designation as a security
  • Binance ends support for Bitcoin Ordinals
  • Crypto liquidity firm GSR secures MPI license in Singapore

Ripple is poised to enter the stablecoin market with a U.S. dollar-backed stablecoin, directly challenging industry giants such as Circle's USDC and Tether's USDT, in anticipation of the market reaching $2 trillion by 2028. In discussions with Ripple's Chief Technology Officer David Schwartz, it was revealed that the stablecoin, still unnamed, will initially be available on the XRP Ledger and the Ethereum blockchain, emphasizing a "compliance-first" approach and transparency in asset backing. This strategic move aims to diversify Ripple's offerings and strengthen its position within the digital asset ecosystem by providing a reliable and compliant stablecoin option, leveraging Ripple's established reputation and financial stability. By focusing on compliance and transparent asset backing, including U.S. dollar deposits and short-term government Treasurys, Ripple aims to capture a significant market share while ensuring customer trust and security, setting the stage for a competitive presence alongside existing market leaders.

In other news, JPMorgan's latest report indicates a positive shift for Ethereum, as the decreasing concentration of staked ETH via Lido's platform mitigates centralization concerns. JPM suggests Ether will avoid being classified as a security, aligning with the criteria that tokens operating on sufficiently decentralized networks may not fall under the securities category. This perspective is supported by historical SEC guidance, suggesting that decentralization plays a crucial role in the regulatory classification of digital tokens. The report also highlights Ethereum's recent Dencun upgrade as a significant step towards bolstering Ethereum's competitive stance against other layer 1 blockchains by addressing previous scalability issues. Such advancements underscore Ethereum's evolving infrastructure and its implications for regulatory perceptions and market dynamics.

On-Chain

According to an analysis by Lookonchain, the Tether Treasury was spotted to have minted $1B USDT again, with a total of $2B USDT within 2 days. This capital influx coincided with the appreciation of Bitcoin’s price and it could signify a larger amount of liquidity being injected on-chain. Traders should be wary of any potential huge market movements soon.

In another analysis by Santiment, there is a high probability of a correlation between mentions of Silk Road and Bitcoin’s market bottom price action. Community sentiment attributed the recent decline of Bitcoin to $65K with news of the US government being authorized to sell nearly 10K Bitcoin from the Silk Road seizure. Traders displayed interest as seen in the market spikes that followed this decline, and they should be expecting four more similar-sized sell-offs throughout 2024, which has historically evoked a cautious approach from traders.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH dropped slightly, currently at 72.47% and 74.22% respectively.
  • The 30-day 25-delta skew (C-P) for BTC dropped to 0.60% while ETH dropped to -1.55%.
  • The futures market witnessed $199.05M in liquidations, with longs representing 54.18%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

34.11%

ETH

Binance

dYdX

32.74%

ETH

OKX

dYdX

26.89%

DOGE

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.

Today’s Bitcoin (BTC) implied volatility (IV) chart illustrates a persistent variance between the 7-day and 30-day maturities as the market approaches the Bitcoin halving event, expected in approximately two weeks. The positioning of the 7-day IV beneath that of the 30-day IV suggests that traders are pricing in less volatility in the immediate term, potentially adopting a 'wait-and-see' approach in anticipation of the halving. This cautious stance reflects a market consensus that is expecting the halving event to be the next major catalyst for price movement, holding off on significant short-term speculative positions.

The term structure for Bitcoin's implied volatility exhibits a contango shape, with no significant changes from the previous day.

Today's BTC options skew chart indicates a continued divergence between the 7-day and 30-day implied volatilities. The 7-day volatility has significantly dipped beneath the 30-day, suggesting a short-term easing of bullish expectations. This change could be influenced by a recent stabilization in BTC's price or a collective market assessment that immediate risks are less pressing, potentially due to a subdued reaction to recent macroeconomic data or successful testing of key support levels. As Bitcoin maintains a price above $68K, the tempered short-term volatility outlook, paired with a steady or increasing 30-day forecast, could reflect traders' confidence in the market's current direction while remaining cautiously optimistic about future developments.

Lastly, @Paradigm’s highlighted notable BTC options trades: a 200x Inverse Iron Fly  (buying an ATM put, writing an OTM put, buying ATM call, writing OTM call) with strikes at 55K/70K/85K set for 28-Jun-24. Additionally, a 158x Call Calendar was purchased for 12-Apr-24 and 26-Apr-24 with strikes at 67K and 72K, while Calls were bought and sold for 12-Apr-24 at 75K and 26-Apr-24 at 74K respectively. A Put was also purchased for 28-Jun-24 with a strike at 40K. On the ETH front, there was a significant trade involving the sale of a 1250x Call for 26-Apr-24 with a strike price of 3.5K.

Crypto Technical Analysis

In technical analysis, BTC displayed a rapid upward movement yesterday following a period of sideways trading. Presently, the price is hovering around the previously identified resistance at $68K. A successful breakthrough above this level could pave the way for testing the next immediate resistance around $71.2K, before aiming to retest the all-time high near $74K. However, in the event of a reversal at this resistance, the $61K level remains a key support zone, with a potential downside of more than 10% if this scenario unfolds.

In contrast to BTC, ETH has not experienced an upward movement in the last 24 hours. Instead, the price has mostly traded sideways. After briefly bouncing up from the $3.3K support, the price has retracted back to that level, reaffirming the strength of this support zone. If this level fails to hold, the next support remains at $3.1K, corresponding to the local low. On the other hand, $3.65K serves as the immediate resistance if a definitive upward movement materializes. As a result of these price movements, the RSI has remained low, near the boundary to the oversold territory, indicating the potential for a reversal to a bullish trend.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

Crypto

Deal Flow

Yours sincerely,
Treehouse Research 🌳