BTC

ETH

S&P Futures 500

$30,211.20

$1,920.19

$4,514.25

(-3.84%)

 (-4.97%)

(-0.10%)

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

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

  • Fed Governor Waller anticipates two more rate hikes depending on future inflation figures; China’s central bank official predicts that China will avoid deflation (more in Macro & TradFi)
  • J.P. Morgan says XRP ruling is a “milestone win”; Ethereum mainnet sees launch of Aave’s stablecoin $GHO (more in DeFi & CeFi)
  • Ethereum staking surpasses $51B; BTC Realized Capitalization hits 7-month high at $396.7B (more in On-Chain)
  • BTC IV continues to bleed lower as market chop ensues; Call skew briefly popped higher but retraced over the weekends (more in Crypto Derivatives)
  • BTC and ETH corrected after the surge on Friday while XRP shows resilience near the local high (more in Crypto Technical Analysis)

Macro & TradFi

Federal Reserve Governor Christopher Waller projected two more interest rate hikes this year, although he suggested that further encouraging inflation data could eliminate the necessity for a second hike. Waller emphasized the importance of longer-term trends over individual data points, remarking, "one data point does not make a trend" and that "inflation briefly slowed in the summer of 2021 before getting much worse". Echoing this sentiment, Chicago Federal Reserve President Austan Goolsbee described the recent inflation data as "promising" but acknowledged that it remained "higher than where we want it".

According to Liu Guoqiang, deputy governor of the People's Bank of China, China will sidestep deflation this year despite weak consumer prices and a sharp decline in June exports. Liu suggested a rebound in consumer prices starting in August and emphasized the economic recovery remains on track with long-term indicators signaling a positive trend. While addressing potential challenges, he mentioned the central bank's ample tools to adjust monetary policy, and warned against speculation on China's foreign exchange rate, asserting that the renminbi's exchange rate expectations have now stabilized.

During Friday’s trading session, the S&P 500 dipped by 0.85%, the Dow Jones Industrial Average rose 0.33%, and the Nasdaq Composite dipped by 0.18%. In corporate news, JP Morgan saw a rise of 0.60% following a 67% surge in Q2 profit, propelled by its acquisition of First Republic. On the other hand, Wells Fargo dipped by 0.34% despite strong quarterly earnings, as the bank boosted its loan loss provisions for commercial real estate and predicted further reductions in customer deposits.

DeFi & CeFi

  • Ripple's XRP ruling a "milestone win", says J.P. Morgan
  • Aave to launch its stablecoin GHO on Ethereum mainnet
  • Ondo Finance expands tokenized US Treasuries and stablecoin to Polygon
  • Europe's first spot Bitcoin ETF to launch this month
  • Multichain CEO taken by police, bridge ceases due to lack of funds
  • Coinbase, Kraken and other exchanges relist XRP after court ruling vs. SEC

J.P. Morgan views the U.S. court's ruling in favor of Ripple as a "milestone win" for the crypto industry, citing the positive impact on "large capital pools" that have been hesitant due to unclear regulations. The decision provides "legal clarity" on what constitutes as a security and reduces the regulatory overhang, which has hindered innovation and adoption in the crypto ecosystem. However, the analysts noted that the regulatory battle is not over, as the SEC can still appeal and pursue similar cases, emphasizing the need for ongoing developments and guidance from lawmakers and regulators.

In other news, Aave's $GHO stablecoin has been launched on Ethereum Mainnet, following a governance proposal by Aave's decentralized autonomous organization on 10 July. The stablecoin allows users to mint $GHO against their existing collateral on the Aave Protocol's Ethereum V3 market. The introduction of $GHO is expected to attract new users and boost Aave's TVL, solidifying its position in the DeFi space. With this launch, Aave had also briefly become the second-largest decentralized finance (DeFi) protocol by total value locked (TVL), overtaking MakerDAO.

On-Chain

In a notable development for the Ethereum network, the total value staked has surged to over $51B. This represents approximately 22% of the total ETH supply being staked. Notably, this achievement has occurred even amidst a period of price consolidation for ETH over the past four months. It underscores the growing recognition among Ethereum holders of the potential long-term advantages associated with staking their ETH, such as the opportunity to earn rewards and contribute to the network's expansion.

Meanwhile, the Realized capitalization (realized cap) for BTC has surged to a 7-month high of $396.7B, surpassing the previous peak observed on July 14, 2023. Realized cap differs from traditional market capitalization by valuing each UTXO based on the price at the time of its last movement, providing a representation of the realized value of all coins in the network rather than their current trading price. This milestone signifies the continued dominance of Bitcoin within the cryptocurrency landscape, despite its price remaining rangebound over the past four months.

Crypto Derivatives

  • Funding rates remains positive for both BTC and ETH
  • Deribit Implied Volatility Index (DVOL) fell to 42.00% and 43.09% for BTC and ETH respectively
  • 30-day 25-delta skew (C-P) for BTC and ETH is at 1.39% and 0.12% respectively
  • The futures market witnessed $318M worth of liquidations last Friday and over the weekends, with long positions representing 67% of the total

Top 3 CEX USDT perp funding rate arbitrage based on the last 24-hour lookback:

Net Annualized APR

Perp (USDT pair)

Long on

Short On

23.11%

BNB

Bybit

Binance

13.31%

SOL

OKX

Binance

10.15%

BTC

OKX

Bybit

Source: @CexyArbBot Telegram

1) Pairs observed include BTC, ETH, SOL, BNB, XRP, LTC, DOGE vs USDT perps 

2) CEX observed include Binance, Bybit, OKX & DYDX

@CexyArbBot allows you to customize CEX, 100+ pairs & lookback periods combo

In the options market, the IV of BTC has been steadily bleeding lower, as BTC's spot prices have been trading rangebound over the past few weeks. On the other hand, the IV of ETH has been relatively stable, occasionally experiencing spikes, especially after ETH reached new quarterly highs. This surge in ETH's price has rekindled the interest of option traders in the token, leading to higher IV levels for ETH compared to BTC in recent days.

Meanwhile, both BTC and ETH term structure remains in contango while IV has fallen slightly across all tenors from last Friday.

Skews (C-P) on both BTC and ETH popped briefly higher post XRP victory but has retraced over the weekend as spot prices failed to sustain its upward momentum. The reversal in skew could also be attributed to short-term call buyers monetizing their calls that are in profit last week, and subsequently shifting over to puts for near-term protection. Nevertheless, both BTC and ETH’s 30-day skew remains in positive territory, suggesting slight bullish sentiments from the option crowd.

Over the weekend, there was notable buying activity of bull call spreads in BTC options, exemplified by the purchase of 300x BTC 21-Jul-23 $32K/$34K spreads. Conversely, in ETH options, short risk reversals were prevalent, with a noteworthy transaction involving a 1,000x ETH 25-Aug-23 $2K/$2.3K short risk reversal. This strategy is commonly employed by traders with a neutral to slightly bearish outlook on the underlying asset.

Crypto Technical Analysis

BTC experienced a significant drop during the US trading session on Friday, undergoing corrections after the pump triggered by the XRP news. Consequently, the BTC price pulled back below the 50-day and 100-day SMA. Despite the drop, the slightly upward-sloping channel remains respected, and BTC has returned to the lower bound of the channel. Should the lower bound continue to hold for the fourth time, BTC is likely to rebound and test the upper bound around $31-31.5K. The RSI currently sits within the normal range at 43.75.

Likewise, ETH has followed similar price movements as BTC, with a large red candle indicating retracements from the mini-bull run driven by optimism surrounding the SEC's lawsuit against XRP. Nevertheless, ETH's price remains above the 3MA and within the middle range of the ascending channel observed earlier. If the downward pressure persists, ETH may test support at the lower bound of the channel, approximately at $1.89K. Conversely, a positive sentiment shift could prompt ETH to re-test the upper bound around $2.03K.

Zooming in on the XRP hourly chart, which influenced the entire market last Friday, the price has shown resilience and maintained proximity to the local high. The furthest pullback of XRP price was at the 38.2% Fibonacci retracement level, after which it moved back up towards the 23.6% level. If market optimism continues, XRP is likely to test the local resistance at around $0.8, representing a roughly 5% further upside.

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Treehouse Research 🌳