🌳 Australia Shifts To “Ample Reserves” System; Tether Acquires More BTC To Bolster Its Reserves

02 Apr 2024, Tuesday

2:38 AM

🌳 Australia Shifts To “Ample Reserves” System; Tether Acquires More BTC To Bolster Its Reserves

BTC

ETH

S&P Futures 500

$69,332.88

$3,487.72

$5288.75

(-2.55%)

 (-3.75%)

(-0.75%)

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


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Our Daily View

What We Are Covering Today

  • Australia’s central bank prepares to transition to a new system; US manufacturing activity expands for the first time in almost 2 years (More in Macro & TradFi)
  • Tether expands Bitcoin reserves significantly; Tron challenges SEC's international regulatory authority (More in DeFi & CeFi)
  • Significant BTC outflow from Coinbase; Coin Days Destroyed metric shows similar patterns to 2017 and 2021 (More in On-Chain)
  • Bitcoin IV dips signal market caution; skew data shows growing defensive investor strategies (More in Crypto Derivatives)
  • BTC and ETH broke their respective triangles to the downside (More in Crypto Technical Analysis)

Macro & TradFi

Australia's central bank, the Reserve Bank of Australia (RBA), is preparing to transition to an "ample reserves" system as it anticipates the maturation of pandemic-era bond purchases. This move aims to maintain sufficient liquidity in the financial system but does not signal a change in the current monetary policy stance. The "ample reserves" approach will involve full allotment repurchase agreements or repo auctions for open market operations, akin to methods adopted by the European Central Bank and others. The RBA's balance sheet is expected to contract significantly as over A$100 billion in bonds mature and a pandemic support funding facility concludes. Assistant Governor Christopher Kent emphasized that this framework is separate from the RBA's quantitative tightening and does not impact its approach to raising the cash rate, which currently stands at a 12-year high of 4.35% after consecutive rate hikes since May 2022. As the RBA navigates its post-pandemic economic measures, it remains vigilant about the uncertain path of interest rates and the ongoing effort to tame inflation.

U.S. manufacturing activity showed unexpected growth in March, marking the first expansion since September 2022 as indicated by the Institute for Supply Management's factory index which rose to 50.3. The rebound was driven by a significant recovery in production, the largest since mid-2020, along with an increase in new orders. This positive shift ends 16 months of contracting activity and signals the early stages of recovery in demand. However, the sector is also experiencing rising input costs, with the price index reaching its highest point since July 2022, pointing to persistent inflationary pressures. Despite some industries reporting contraction, the overall outlook for manufacturing is one of cautious optimism, with projections of stronger business activity in the coming quarters.

On Monday, the Dow and S&P 500 saw declines, with the Dow dropping by 0.6% and the S&P 500 by 0.2%, due to concerns about the Federal Reserve's interest rate cuts following strong manufacturing data that sent Treasury yields up. Contrarily, the Nasdaq ended the day marginally up by 0.1%. The unexpected manufacturing growth yesterday led to an increase in both 10-year and 2-year Treasury yields, raising questions about the anticipated rate cuts by the Federal Reserve. The U.S. rate futures market showed a decrease in the probability of a June rate cut, down to 58% from the previous week's 64%. The market's shift from expectations of a weaker economy with more rate cuts to a stronger economy with fewer cuts was reflected in the sentiment. The majority of S&P 500 sectors ended lower, with real estate, healthcare, and utilities seeing significant losses, while the energy sector gained amid rising oil prices. AT&T's shares fell by 0.6% after announcing a significant data leak. Market volume was slightly below the 20-day trading average, and there were more declining issues than advancing ones across major exchanges.

CeFi & DeFi

  • Tether boosts Bitcoin reserves with latest acquisition
  • Tron has asked a New York federal court to dismiss a U.S. SEC lawsuit
  • dYdX to set up a legal entity in the Cayman Islands
  • Tether completed the highest level security compliance audit
  • Volume on South Korean exchange Upbit crashes by 75%

Tether has significantly increased its Bitcoin reserves by purchasing 8,888 BTC, making it the seventh-largest holder of Bitcoin globally. This acquisition, valued at approximately $618 million as of March 31, boosts Tether's total BTC holdings to 75,354, with an acquisition cost average of $30,305 per Bitcoin, now worth around $5.2 billion. This strategic move, resulting in an unrealized profit of $2.94 billion, aligns with this period of rising institutional interest in Bitcoin, fueled by the approval of U.S.-based spot Bitcoin ETFs and the upcoming Bitcoin halving event. In response to this growth, Tether plans to invest 15% of its net profits into Bitcoin to diversify its stablecoin's backing assets further. 

Elsewhere, Tron has countered the SEC lawsuit by requesting its dismissal, arguing that the SEC oversteps its bounds by trying to regulate international digital asset transactions. The foundation's defense asserts that the SEC lacks jurisdiction over transactions targeted at foreign buyers on global platforms, challenging the SEC's attempt to act as a global regulator. The case revolves around the SEC's claim that Tron's sale of TRX and BTT tokens constitutes unregistered securities offerings. Tron contends these offerings occurred outside the U.S. and took measures to avoid the U.S. market, questioning the SEC's authority over subsequent secondary sales on U.S.-based platforms. Additionally, Tron refutes allegations of manipulative trading and undisclosed celebrity promotions, pointing out the lack of specific evidence or identified victims. 

On-Chain

According to an analysis by CryptoQuant, there's a notable trend of significant BTC outflows, with two large transactions recorded within the past week. The first notable outflow was approximately 16,800 BTC, followed by an even larger movement of 17,000 BTC. Such substantial outflows typically suggest institutional purchasing or preparations for a spot ETF. These activities often imply strong investor confidence and can be a bullish indicator, as large quantities of BTC are moved out of the exchange, potentially for long-term holding strategies. It also indicates a decrease in selling pressure on the market.

In another analysis by CryptoQuant, there is a significant spike in the Coin Days Destroyed metric with a 60-day moving average reaching 23.2 million suggesting a considerable shift in long-dormant Bitcoin. This kind of movement, where long-held Bitcoin is transacted, is typically indicative of increased activity among long-term holders. Similar spikes were observed during the bullish runs of 2017 and 2021, often seen as periods of distribution where holders who have accumulated Bitcoin for extended periods begin to realize profits.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH decreased to 73.68% and 78.45% respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH fell back to 0.99% and -2.98%, respectively.
  • The futures market witnessed $316.34M in liquidations, with longs representing 81.68%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

35.54%

DOGE

Bybit

dYdX

24.91%

DOGE

Bybit

OKX

24.10%

SOL

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.


The implied volatility (IV) for Bitcoin (BTC) ATMs has decreased by 64.92% for 7-day maturities and 72.38% for 30-day maturities, signaling a decline from the previous day. This coincides with BTC trading slightly lower, reflecting a lack of strong directional conviction in the market.

The term structure of Bitcoin remains distinctly in contango, showing a contango shape with minimal variations along the curve. A notable yet slight decline at the curve's front end may be attributed to the heightened activity of option market makers focusing on BTC options with tenors of up to 59 days.

The BTC 25-Delta skew data indicates a decline in bullish sentiment among option investors, with skews recorded at -0.58% for the 7-day skew and 0.99% for the 30-day skew. The shift in skew suggests a shift towards a defensive strategy, as investors increasingly purchase put options to hedge against potential downside risks. 

Lastly, @Paradigm's option flows last week, showcased strategic defensive plays and structured deals. Key BTC trades included the sale of 1100x 26-Apr-24 66/80K Bull Risk Reversal and the purchase of 450x 26-Apr-24 74K Calls

Crypto Technical Analysis

Onto technical analysis, the anticipated scenario from yesterday’s analysis unfolded as the price broke below the triangle pattern approaching the apex. Fortunately, the price swiftly found support at the previously identified $69K level and is currently trading around $69.5K. If the $69K level fails to hold, a potential downside target lies at $66.5K to $67K, aligning with the lower trendline formed by the local higher lows. Conversely, if the bulls regain control, the triangle’s upper boundary now acts as the immediate resistance near $71.5K, with the potential for BTC to test a new all-time high at $74K.

On the other hand, ETH has experienced similar price actions as it broke below the lower boundary of the triangle pattern. However, the current price of ETH is not close to the immediate support zone at the $3.3K level, suggesting the potential for further downside. Should that level fail to hold, the next support is anticipated at the $3.1K level, corresponding to the local low. Conversely, the previous upper boundary of the triangle now acts as the immediate resistance, presenting a 4.5% upside if the bulls regain control of the market.

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