🌳 Biden Proposes Tariff Hikes On Chinese Imports; Optimism Mounts For Crypto ETF Approvals Beyond BTC And ETH

18 Apr 2024, Thursday

2:36 AM

🌳 Biden Proposes Tariff Hikes On Chinese Imports; Optimism Mounts For Crypto ETF Approvals Beyond BTC And ETH

BTC

ETH

S&P Futures 500

$61,495.70

$2,990.04

$5,067.75

(-3.96%)

 (-3.35%)

(-0.61%)

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


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What We Are Covering Today

  • Biden targets Chinese imports to boost economy; New research shows a decline in Russia and China’s effort to influence U.S. politics (More in Macro & TradFi)
  • Executives from Grayscale, Bitwise, and ProShares are optimistic about ETFs for cryptocurrencies other than BTC and ETH; Kraken launches its self-custodial wallet (More in DeFi & CeFi)
  • BTC inflow to accumulation addresses at record high; Supply data shows potentially a “top-heavy” market (More in On-Chain)
  • IV stabilizes as halving nears; BTC skew improves amid rising investor interest (More in Crypto Derivatives)
  • BTC continues to decline after triple-top; ETH to test $2.9K resistance (More in Crypto Technical Analysis)

Macro & TradFi

US President Joe Biden is intensifying efforts to triple tariffs on Chinese steel and aluminum imports, targeting a hike from the existing 7.5% to bolster union support in the crucial swing state of Pennsylvania ahead of the November presidential elections. In an upcoming meeting with the United Steelworkers union in Pittsburgh, Biden will direct Trade Representative Katherine Tai to both implement the tariff increases and initiate an investigation into China's shipbuilding practices, which are allegedly unfair. These actions aim to protect American manufacturing jobs and counteract China’s industrial overcapacity, which pressures domestic producers. Despite concerns, these measures are expected to have minimal inflationary impact, as Chinese steel constitutes only a small fraction of U.S. steel demand. The broader strategy includes safeguarding U.S. economic interests and enhancing national security, amidst ongoing tensions with China and attempts to stabilize diplomatic relations.

In other news, new research from Microsoft reports a noticeable decline in Russian and Chinese efforts to influence U.S. politics compared to the 2016 and 2020 elections. Russia is allegedly attempting to weaken U.S. support for Ukraine by disseminating disinformation in English and Spanish, which frequently portrays whistleblowers or journalists and is amplified through unaffiliated websites. These narratives, seemingly endorsed by Russian President Vladimir Putin's administration, often reach Americans unaware of their origins. Meanwhile, China has been employing artificial intelligence to craft and distribute provocative images and memes, such as AI-generated scenes of disasters, to exacerbate social divisions in the U.S. The effectiveness of these campaigns has been limited, with sophisticated AI-generated deepfake videos failing to gain significant traction. However, simpler digital manipulations, particularly fake audio content, have proved more impactful in spreading misinformation.

Lastly, U.S. stock markets experienced a downturn, with S&P 500, Nasdaq, and the Dow declining by 0.58%, 1.24%, and 0.12% respectively, following remarks by Federal Reserve Chair Jerome Powell hinting at a potential delay in interest rate cuts. Notably, ASML ADR saw a significant drop of 7.09%, driven by weaker-than-expected bookings in Q1 and reduced sales in China, exacerbated by U.S. export restrictions. Nvidia led the downturn among megacap stocks, falling by 3.87%. On the international front, attention turns to Japan's Consumer Price Index data set for release tomorrow at 07:30 SGT. This will help the Bank of Japan (BOJ) gauge the sustainability of the recent return to inflation. Additionally, TSMC, the world's largest chip foundry is currently trading at modest valuations despite reaching record highs and is scheduled to report its earnings.

CeFi & DeFi

  • Executives from Greyscale, Bitwise, and ProShares said ETFs with crypto other than BTC and ETH are inevitable
  • Kraken launches its own self-custodial wallet
  • US senators introduce new stablecoin bill
  • Magic Eden surpasses Blur in NFT trading volume in March
  • Worldcoin to launch its own L2 called World Chain
  • Jury begins deliberations in the $110M Mango Markets fraud trial
  • Bitcoin miner stocks drop on post-halving profit fears

David LaValle, Grayscale's global head of ETFs, expressed confidence during a roundtable discussion hosted by the New York Stock Exchange that regulators will eventually approve ETFs for cryptocurrencies beyond just BTC and ETH. While the industry expects applications for spot ether ETFs to face potential denial next month, there is optimism that the Securities and Exchange Commission (SEC) will ultimately approve Ethereum-based investment vehicles. Matt Hougan, chief investment officer at Bitwise Asset Management, and Simeon Hyman, ProShares Head of Investment Strategy, also shared similar sentiments during the roundtable, emphasizing the inevitability of the market evolving to include other cryptocurrencies besides BTC and ETH. They highlighted the growing interest from investors and the benefits of ETFs in providing easier access and increased exposure to digital assets. As the conversation around digital asset ETFs gains momentum, more financial professionals are considering incorporating cryptocurrencies into their clients' portfolios.

In other news, Kraken, the second-largest U.S.-based cryptocurrency exchange, has launched its own wallet, entering into competition with rivals like Coinbase and MetaMask. Notably, Kraken's wallet is the first from a major exchange to be open-sourced, allowing developers to contribute to the code and receive grants for identifying vulnerabilities. The wallet prioritizes user privacy by collecting minimal data and proxying user activity through Kraken's infrastructure to shield IP addresses. Eric Kuhn, Product Director for Kraken Wallet, emphasized the platform's commitment to user privacy and open-source principles. The move aligns with Kraken's broader strategy of expanding its product offerings and promoting self-custody of assets, particularly in light of the risks associated with centralized exchanges highlighted by events like the FTX exchange collapse in 2022.

On-Chain

On-chain data from CryptoQuant reveals a record-setting level of BTC inflow to Accumulation Addresses, reaching a new all-time high with an influx of 27.7k BTC in a single day. This peak surpasses the prior high of 25.1k BTC seen on March 22, 2024. Accumulation Addresses are characterized by their lack of outgoing transactions, holding balances over 10 BTC, not being associated with centralized exchanges or miners, receiving at least two incoming transactions, and having activity within the last seven years. This surge in inflow to such addresses indicates strong holding patterns and possibly signals a bullish sentiment.

An analysis by @checkonchain, shows that the BTC market is signaling a crucial point in its current cycle, where the percentage of supply in profit reflects a potentially 'Top Heavy' market. Historical data illustrates that in such markets, the propensity for large-scale sell-offs increases as investors who purchased at higher levels may resort to panic selling, creating significant pressure on market sentiment. The current pattern of the supply in profit mirrors the cautionary tales of 2017 and 2021, suggesting a similarity to past cycles where substantial corrections followed robust bull runs.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remain flat at 70.78% and 77.36%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC recovered to -1.82%, while ETH remained at -8.84% in the negatives.
  • The futures market witnessed $230.16M in liquidations, with longs representing 74.01%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

8.69%

BTC

dYdX

Binance

8.12%

BNB

OKX

Bybit

7.95%

BNB

Binance

Bybit

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.


Implied Volatility (IV) has stabilized as option buyers consolidate their expectations for market volatility in the upcoming weeks, potentially influenced by diminished investor confidence in Bitcoin profitability following the imminent halving event in two days. This stabilization suggests that market participants are anticipating significant price fluctuations, likely reflecting concerns over the halving's impact on Bitcoin's value.

The term structure remains in contango, with minimal changes across the curve, indicating negligible variances in future volatility expectations over the last 24 hours.

The BTC 25-delta skew chart has witnessed a notable decrease, with the 7-day skew rebounding to -1.82% from yesterday's -8.04%, while the 30-day skew has also shown improvement to -3.14%. This shift could potentially be attributed to the surge in Google searches related to Bitcoin halving, reaching its peak, indicating growing interest among novice investors seeking to enter the Bitcoin market, possibly influenced by observing Bitcoin's performance post-halving in the past.

Yesterday, @Paradigm showcased a varied mix of derivative structures. Key BTC trades encompassed the procurement of 500x 31-May-24 55/50k Put Spreads sold, and a significant volume in calls, with 300x 26-Apr-24 67k, 300x 26-Apr-24 63k, and 300x 26-Apr-24 64k Calls all bought. Concurrently, ETH options saw fervent activity, with the purchase of 3000x 26-Apr-24 3100 Calls and the disposition of 2750x 26-Apr-24 3100 Calls, along with the acquisition of 2750x 26-Apr-24 30/26k Put Spreads.

Crypto Technical Analysis

Moving on to TA, BTC's price action is at a pivotal point on the daily chart, currently positioned at $61.5K. This price reflects a downward trend consistent with the previously observed triple-top formation. Should BTC slip below the key support line at $60K, a 2.6% decrease from here, it could mark the onset of a more significant bearish phase. The RSI (14) stands at 39.47, suggesting that we are approaching oversold conditions. This could potentially attract buying pressure if the index dips further.

Looking at ETH’s daily chart, we observe that recent price action depicts a continued downturn with the price now hovering around the $2.98K level. This recent movement indicates a break below the previously stable support region, suggesting a bearish sentiment in the market. The immediate resistance is around $3.75K, a level that ETH has struggled to surpass recently. If ETH breaks below the immediate support of around $2.9K, we might witness further downside with the next substantial support at approximately $2.5K. This could represent a crucial psychological and technical threshold for the market. The RSI has dropped to a reading of 37.89, hinting at a potential oversold condition that could attract buyers looking for value entry points.

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