🌳 Biden Issues Stern Warning To Israel Over Gaza; U.S. House of Representatives Voted To Overturn SEC’s Crypto Accounting Policy

09 May 2024, Thursday

2:40 AM

🌳 Biden Issues Stern Warning To Israel Over Gaza; U.S. House of Representatives Voted To Overturn SEC’s Crypto Accounting Policy

BTC

ETH

S&P Futures 500

$62,582.70

$3,019.68

$5,214.25

(-1.41%)

 (-1.61%)

(+0.17%)

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

  • Biden to halt weapons to Israel over Gaza invasion; Toyota predicts profit drop, boosts AI investment (More in Macro & TradFi)
  • The U.S. House of Representatives voted to overturn SEC’s accounting policy; Robinhood reports a 224% surge in cryptocurrency trading volume (More in DeFi & CeFi)
  • Santiment’s latest data on BTC whales show strong market confidence (More in On-Chain)
  • BTC's IV rises with spot price dip; investors favor puts, signaling bearishness (More in Crypto Derivatives (More in Crypto Derivatives)
  • BTC’s head and shoulders pattern materializes while ETH forms a large bearish triangle with lower highs since March (More in Crypto Technical Analysis)

Macro & TradFi

President Joe Biden has issued a stern warning to Israel, stating that the U.S. will halt the supply of offensive weapons if Israel proceeds with a full-scale invasion of Rafah in southern Gaza. The U.S. aims to facilitate a ceasefire and the release of hostages held by Hamas, striving to avoid further escalation. The suspension marks a significant policy shift by the Biden administration, emphasizing a cautious approach to military support based on Israel's actions in densely populated areas, as discussions continue over the humanitarian implications of such military interventions.

In other news, Toyota, the world's largest carmaker, anticipates a 20% decrease in annual profit as it significantly ramps up investment in electric vehicles and artificial intelligence to counter competition from Chinese manufacturers. The company plans to channel ¥1.7 trillion ($11 billion) into growth sectors, including AI and software enhancements. This strategic pivot aims to transform Toyota's traditional hardware-centric business model, integrating advanced mobility services and software solutions. This substantial investment underscores Toyota's commitment to maintaining its market leadership and adapting to the evolving automotive landscape, despite the immediate financial impact highlighted by a predicted ¥1.3 trillion drop in operating profit for the fiscal year through March 2025.

On Wednesday, US equities struggled for direction again as traders looked for more clues on when the Federal Reserve may start cutting rates. The Dow Jones increased by 0.44% and Nasdaq fell slightly by -0.04%. Uber Technologies (-5.72%) dropped as gross bookings missed and legal costs ate into profitability. Lyft (+7.11%) surged on an earnings beat and upbeat guidance. Intel (-2.22%) fell after forecasting revenue this quarter to fall below the midpoint of previous guidance due to a new US ban on chip exports to Huawei. Susan Collins cautioned that reaching the Fed’s 2% inflation goal may take "more time than previously thought", without indicating when rate cuts might begin.

CeFi & DeFi

  • The U.S. House of Representatives passes a resolution to reject the SEC’s accounting policy
  • Robinhood reports 224% surge in cryptocurrency trading volume
  • Potential US Blockchain Integrity Act would ban crypto mixers for 2 years
  • Coincheck and Thunder Bridge move closer to Nasdaq listing with public filing

The U.S. House of Representatives has passed a resolution to reject the Securities and Exchange Commission's (SEC) Staff Accounting Bulletin No. 121, a controversial crypto accounting policy. This policy mandates that banks holding cryptocurrencies for customers reflect these assets on their balance sheets, a rule criticized for imposing significant capital burdens on these institutions. In response, President Joe Biden has stated his intention to veto the resolution, should it reach his desk, defending the SEC’s measure as crucial for protecting consumers from the inherent risks associated with cryptocurrency transactions. 

Meanwhile, Robinhood has reported a staggering 224% surge in cryptocurrency trading volumes in the first quarter, reaching $36 billion, which propelled the company to its second consecutive profitable quarter with a net income of $157 million. Despite these positive financial outcomes, Robinhood's quarter was overshadowed by a Wells notice from the SEC, targeting its cryptocurrency listings and custodian services, which CEO Vladimir Tenev labeled as a "disappointing development." This regulatory challenge comes even as crypto-related services contributed nearly 40% of Robinhood's $329 million transaction-based revenue. The company's shares briefly rallied by 7.3% in after-hours trading following these announcements.

On-Chain

Santiment’s latest data reveals that Bitcoin whales, specifically those with wallet balances ranging from 1,000 to 10,000 BTC, have demonstrated strong market confidence by accumulating an additional 15,121 BTC within the last 24 hours. This surge in accumulation comes amid Bitcoin's price fluctuation between $61K and $64K, with the total holdings for these wallets now peaking at their highest in two weeks, suggesting a bullish sentiment among significant investors despite recent price dips.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained relatively flat at 55.29% and 62.82%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH decreased to -1.12% and -3.98% respectively.
  • The futures market witnessed $141.8M in liquidations, with longs representing 70.09%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

14.66%

AVAX

OKX

dYdX

12.72%

AVAX

OKX

Bybit

11.45%

AVAX

OKX

Binance

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 BTC ATM IVs show an uptick in 7-day and 30-day IVs, indicating heightened expectations for short-term volatility. This increase in IV correlates with a dip in BTC's spot price, prompting option investors to intensify their buying activities. The shift likely reflects a strategy to leverage expected price movements, suggesting that traders are positioning themselves to capitalize on the potential for greater price swings in the near future.

The consistent contango shape of BTC's Term Structure suggests that market participants anticipate future volatility to surpass current levels. Simultaneously, the IV across the curve has decreased, implying that BTC is expected to stabilize. This alignment between expectations of higher future volatility and a reduction in immediate implied volatility reflects the market view that, while anticipating potential fluctuations, it perceives a more predictable short-term outlook for BTC prices.

The BTC 7-day and 30-day call-put skews dipped into negative territory, dipping to -4.05% and -1.12% respectively. This movement suggests that options investors increasingly favor puts over calls, which indicates a bearish sentiment or a protective stance against potential downside risks. The negative skew points to a growing expectation among investors that Bitcoin might face downward price pressures in the near term. 

Yesterday, @Paradigm showcased significant trading activity in both Bitcoin and Ethereum options, spotlighting key strategies and positioning by market participants. Prominent BTC transactions included the purchase of 200x 24-May-24 60k Puts, 200x 24-May-24 59k Puts, and 100x 31-May-24 58k Puts, reflecting a protective strategy across different strike prices. Additionally, a noteworthy 128x 28-Jun-24 80k/90k Call Spread was also bought, indicating a strategic upside positioning. On the Ethereum side, there was a major sale of 1500x 17-May-24 3050 Calls and a purchase of 1250x 17-May-24 3100 Calls.

Crypto Technical Analysis

Onto Technical Analysis, our previous assessment of BTC has proven accurate as its price declined further over the last 24 hours, aligning with the formation of a head and shoulders pattern. BTC's price is approaching the previously identified $60K support level. A breach could trigger a decline towards the $51K to $52K support range on the daily chart, representing a potential 15% decrease from current levels.

On the other hand, ETH has experienced a similar downward movement as its price dipped below the $3K mark and approached the previously identified support level. Taking a broader view on longer timeframes, a trend line reveals local lower highs since mid-March, signaling a prevailing bearish momentum as selling pressure outweighs buying demand. Consequently, ETH appears to form a large descending triangle pattern on the daily candles, with the price approaching the apex, indicating potential high volatility ahead. Should the lower boundary fail to provide support, ETH could drop to the next daily support at $2.6K, the previous resistance observed in January, representing a potential decline of 13%.

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