Binance Intends To Acquire FTX Following Mass Exodus Of Users; Republicans Poised To Reclaim The House

09 Nov 2022, Wednesday

3:00 AM

BTC	ETH	S&P Futures 500
$18,288.00	$1,314.00	$3,832.75
(-10.86%)	(-15.89%)	(+0.22%)
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

US stocks rose as the market anticipates a political gridlock (more in Macro & TradFi)
Binance signed a non-binding letter of intent to acquire FTX (more in DeFi & CeFi)
BTC number of addresses sending to exchanges reach 4-month highs (more in On-Chain)
IV skyrocketed while put skew tightened significantly; VIX rose by more than a percentage point despite equities being up (more in Crypto Derivatives)
BTC plunged to the lowest price since June; ETH nosedived and fell back into October range (more in Crypto Technical Analysis)

Macro & TradFi

GM! US stocks closed green as investors bet on the likelihood of political gridlock, with the Republicans taking back at least the House. A political gridlock, or dividend Congress, has historically been a boon for stocks. Barring any unforeseen circumstances from the election, investors will likely switch their focus to the upcoming CPI data. Meanwhile, Disney missed earnings expectations, falling over 6.8% in the after-market. Tesla also closed ~3% lower as over 40K vehicles were recalled due to possible power steering issues.

US stocks finished higher, with the S&P 500 up 0.56%, the Nasdaq up 0.75%, and the DJIA up 1.02%. The 10Y yield decreased to 4.149%. Meanwhile, WTI crude decreased 3.48% to $88.89 a barrel as hopes of easing China's Covid-19 policies diminished.

DeFi & CeFi

MIM stablecoin lost its peg briefly amid partial FTT backing fears
FTX paused withdrawals of user’s funds
Binance intends to acquire FTX
Jones DAO’s Dopex Metavaults expected to go live today
Shell protocol set to announce its governance token airdrop
BitMEX set to launch its token on 11.11

Amidst yesterday’s chaos and panic from the Alameda fiasco, FTX paused withdrawals of users’ funds. During that time, the MIM stablecoin also lost its peg briefly amid partial FTT backing fears as Alameda had a large position of FTT as collateral on Abracadabra. Since then, Binance and FTX have come to a deal for Binance to acquire FTX. While the sale has not been set in stone, Binance has signed a non-binding Letter of Intent intending to acquire FTX.com. To know more about this saga, take a look at our thread!

Elsewhere, Jones DAO’s Dopex Metavaults are expected to go live today. The new product will allow users to deposit their Dopex LP tokens to either hedge or leverage their positions depending on their outlook on the market. This is intended to achieve improved LP performance, reduced IL and better Dopex liquidity on calls and puts.

On-Chain

The BTC Number of Addresses Sending to Exchanges (7d MA) just reached a 4-month high of 5,323.756, as the CEX war between FTX and Binance came to a close yesterday.

ETH Open Interest in Perpetual Futures Contracts just reached a 3-month low of $1,015,985,776.71 on FTX.

Crypto Derivatives

Funding rate flipped to negative on BTC and ETH
30-day IV rose for both BTC and ETH to 70.24% and 95.12%, respectively
30-day 25d put skew tightened for BTC and ETH to -14.49 % and -5.92%, respectively

For futures, total liquidations came in at $918M with the majority coming from long liquidations at $627M as prices whipsawed to the downside yesterday. The funding rate across all exchanges flipped into negative territory.

On the options front, the ever-bleeding long volatility trade has finally paid off as IV skyrocketed on Tuesday while RV tagged along. The 7-day IV shot up to a monthly high of 113% on BTC and 155% on ETH. The term structure on both majors is currently in steep backwardation, with a notable kink on the 11th November expiry, likely to be CPI related. Put skew tightened significantly, reaching levels comparable to what we have seen in the past during the LUNA/3AC period.

On the flow side, heavy put buying dominated the tape, specifically on year-end puts expiring 30 Dec. Some notable strikes include 15K puts on BTC and 1.3K puts on ETH. The last 12 hours also saw huge inflows of short straddles, likely to be existing long straddle positions taking profits and/or new short vol trades being opened to take advantage of the heightened volatility.

Elsewhere, the equity vols appears to be feeling the effects of what has happened in crypto. The VIX indes rose to 25.5%, an increase of more than a percentage point, despite the fact that the broader equity markets were up.

Crypto Technical Analysis

BTC is currently at $18,531, after plunging by 10.0% in a day, and wicking to levels lower than the $17,500 June low. On the daily, BTC has notably lost its range of support at $20,213, and has fallen back into its range of $18,691 to $19,992. On the H4, price action is in extremely bearish mode with lower highs and lows created. BTC has fallen back into, and tested the bottom of its range at $18,506, before rebounding slightly. If this level of support is respected, BTC will have to test the upper bound of its range before any more upside can be observed.

ETH has also plummeted, with the price currently at $1,332 after dropping by 15%. On the daily, price has fallen right through the support at $1,483.2, and is now back inside the range of $1,251.3 to $1,333.2. On the H1, price has also broken down, wicking to the bottom of the range at $1,251.3 before bouncing slightly. Should this level of support not hold, the next price level to be tested would be at $1,040.7.

Daily Readings

TradFi

Crypto

Yours sincerely,
Treehouse Research 🌳

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