BTC	ETH	S&P Futures 500
$65,524.77	$3,080.12	$5,103.00
(-3.54%)	(-1.13%)	(-1.48%)
Note: All percentages shown above are referenced to the previous business work day's 09:00 (GMT+8)

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March 2024 Market Recap

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Our Daily View

What We Are Covering Today

Israel weighs response to Irana attack; EU investigates China's medical device procurement (More in Macro & TradFi)
Hong Kong SFC approves multiple BTC and ETH Spot ETFs; Rostin Behnam questioned about his interactions with SBF during his tenor at the CFTC (More in DeFi & CeFi)
BTC whales had notable accumulation; Balanced influx of new capital into BTC (More in On-Chain)
Bitcoin's IV spikes on geopolitical tensions; market normalizes amid option expiries (More in Crypto Derivatives)
BTC and ETH continue its bearish decline (More in Crypto Technical Analysis)

Macro & TradFi

In the wake of Iran's unprecedented missile and drone attack, Israel, supported by international backing, particularly from the U.S., is contemplating a measured response. Despite the nearly complete interception of the attack by combined Israeli and international defenses, the situation remains tense. The U.S. and European leaders urged Israelis to exercise restraint to avoid escalating conflicts that could disrupt global economic stability, particularly by affecting oil prices and inflation rates. This push for moderation aligns with broader international efforts to maintain focus on diplomatic resolutions and minimize regional instability. The strategic discussions highlight a critical juncture where geopolitical strategy and international diplomacy intersect with national security imperatives.

Meanwhile, the European Union is set to investigate China's medical device procurement practices over allegations of Beijing's unfair policies benefiting domestic manufacturers. Set to commence in mid-April, this investigation represents the first application of the EU's International Procurement Instrument (IPI), established in 2022 to enforce reciprocity in public procurement markets. The EU's strategy aims to address the perceived imbalance and ensure equitable market access, potentially restricting Chinese participation in EU tenders if the probe confirms unfair practices. This move underscores a broader European strategy to strengthen economic security and could escalate tensions between the EU and China, already strained by recent investigations into Chinese electric vehicles and other trade issues. The outcome of this investigation could significantly impact EU-China trade dynamics and influence global medical device markets.

Lastly, March's retail sales in the U.S. surpassed expectations, with nominal sales rising by 0.7%, compared to the anticipated 0.4%, and the control group experiencing a notable 1.1% increase. Despite this positive economic indicator, U.S. equity markets experienced declines, attributed to rising yields and heightened concerns about the ongoing Middle East conflict. Specifically, the S&P 500 fell by 1.20%, the Nasdaq Composite by 1.65%, and the Dow Jones Industrial Average by 0.65%. Apple's shares declined by 2.19% following the news that Samsung has overtaken its spot as the world's leading phone manufacturer. Market focus now shifts to upcoming economic data from China, including property prices, retail sales, GDP, and industrial production, set to be released today at 10:00 SGT.

CeFi & DeFi

Hong Kong approves BTC and ETH Spot ETFs
Elizabeth Warren demands information on CFTC chair’s relationship with SBF
Filecoin Foundation launches Chinese legal inquiry into STFIL incident
Offchain Labs releases Arbitrum BOLD on testnet
Solana rolls out an update to tackle network congestion

The Hong Kong Securities and Futures Commission (SFC) has approved the launch of several spot BTC and ETH ETFs, including those from major asset managers such as China Asset Management, Harvest Global Investments, Bosera Asset Management, and HashKey Capital. These ETFs will enable investors to subscribe for shares using BTC and ETH directly, providing new asset allocation opportunities. Collaboration with virtual asset trading platforms like OSL is integral to facilitating the operation of these ETFs, ensuring a secure trading environment. This move suggests Hong Kong's commitment to fostering a crypto-friendly environment, contrasting with mainland China's crackdown on cryptocurrency activities. With fewer alternatives for ETH exposures, the spot ETH ETFs could attract significant investor interest, further bolstering Hong Kong's position as a leading crypto hub in the global market.

In other news, senators Elizabeth Warren and Chuck Grassley are pressing the head of the U.S. Commodity Futures Trading Commission (CFTC), Rostin Behnam, for more transparency regarding his interactions with Sam Bankman-Fried, the former CEO of FTX. Specifically, they demanded an account of all meetings and correspondence between Behnam and Bankman-Fried during Behnam's tenure. The CFTC had met with Bankman-Fried and his team multiple times over 14 months, and Behnam admitted to exchanging messages with the FTX founder, who was recently sentenced to 25 years in prison for fraud. Behnam's agency had significant reasons for communication with FTX, particularly regarding FTX's efforts to establish its LedgerX division to directly handle margined derivatives trading. Warren and Grassley are seeking copies of all written communications along with minutes and timelines of all interactions. This scrutiny echoes similar concerns raised about Securities and Exchange Commission Chair Gary Gensler's agency's interactions with Bankman-Fried before FTX's collapse.

On-Chain

Santiment's on-chain data reveals that wallets holding between 100 to 100,000 BTC, commonly known as BTC whale wallets, have been accumulating since March 1st. Despite market volatility and the impending BTC halving event set for April 19th, these significant stakeholders have displayed confidence by increasing their holdings. Wallets containing 100-1,000 BTC have added 43,489 coins, wallets in the 1,000-10,000 BTC bracket have accumulated 80,544 coins, and the largest wallets, holding 10,000-100,000 BTC, have expanded by 91,732 coins. This trend suggests a bullish sentiment among the most influential market players and could be indicative of a positive outlook for the market's future trajectory.

Elsewhere, an analysis by Glassnode reveals a notable influx of new BTC investors, as evidenced by the increase in coins less than six months old, growing from 20% at the beginning of 2023 to 47% by April 2024. This shift mirrors trends from past bull markets, indicating significant new market participation. The balance between established and new investors suggests an active capital injection, a precursor to market evolution. Monitoring the trajectory of this trend is essential, as it may dictate the market's next pivotal movement.

Crypto Derivatives

Funding rates remain positive for both BTC and ETH.
Deribit Implied Volatility Index (DVOL) for BTC and ETH remain elevated at 70.8% and 73.28%, respectively.
The 30-day 25-delta skew (C-P) for BTC decreased further to -1.87% while ETH improved to -4.69%.
The futures market witnessed $277M in liquidations, with longs representing 71.18%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR	Perp (USDT pair)	Long on	Short On
26.03%	BNB	OKX	Bybit
23.22%	BNB	Binance	Bybit
20.90%	AVAX	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.

The 7-day IV has reached a peak of 80.81%, while the 30-day IV trails closely behind, registering at 72.36%. This uptick in volatility indices appears to be correlated with the intensification of geopolitical uncertainties, particularly in the Middle East. Notwithstanding this, the latest daily figures indicate a notable contraction in these elevated volatility levels. This suggests an assimilation of the recent geopolitical developments into market expectations, as participants potentially begin to normalize this heightened state of volatility in their trading behaviors.

The short to mid-term tenures, particularly up to the 17-day expiries, are currently priced at an implied volatility of 90%. This backwardation is indicative of a market where near-term uncertainty is perceived to be higher than the long-term, which can often signal investor apprehension regarding immediate events or conditions. It is important to note a dip from the previous day's volatility levels, which could be attributed to a significant volume of options contracts either being exercised or expiring out of the money.

The BTC 25-delta skew chart shows a significant decline with the 7-day and 30-day IV in deep negative territory, at -4.69% and -6.40% respectively, indicating a bearish sentiment among traders for the short to mid-term, likely influenced by recent geopolitical developments.

Yesterday, @Paradigm showcased a varied mix of derivative structures this week, with market participants actively engaging in both hedging and speculative strategies. BTC options space featured considerable trades such as 462x 26-Apr-24 64/70K Call Spreads purchased, and a notable 400x 26-Apr-24 55K Puts bought, signaling a hedging sentiment. Meanwhile, ETH contracts also saw significant activity, with a substantial transaction of 1700x 19-Apr-24 3250 Calls bought, pointing to bullish expectations from investors.

Crypto Technical Analysis

Moving on to TA, the BTC 1-day chart reveals a formation akin to a triple top pattern, usually interpreted as a bearish reversal signal. Currently, BTC is hovering around the $63.7K mark, with potential support near $60K. A break below this critical support could signify a shift to bearish market sentiment. Conversely, a resistance level at $70K stands as the barrier for bullish momentum. The Relative Strength Index (RSI) hovers slightly above the midline, signaling an equilibrium between buying and selling forces.

In the ETH daily chart, ETH is trading around $3,1K, continuing to retreat from its peak at the $4K level. However, its price is still above the significant support zone near $3K, which has historically acted as a pivot point between bullish and bearish trends. The Relative Strength Index (RSI) is currently near 41, indicating that the selling pressure may be slowing down and a potential stabilization or reversal could occur if buyers regain control. Key resistance levels to watch are $3.5K and $4K, which ETH must surpass to renew bullish momentum. Conversely, if the support at $3K gives way, we may witness further downside, potentially testing the next support levels at $2.8K or lower.

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January 2023 Market Recap

Authors: @Web3Geee, @wyangdan and mriddgreat.eth

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