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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
- Stocks swung, bonds rallied post-CPI; US might send Patriot air defense system to Ukraine (more in Macro & TradFi)
- Mass exodus of funds hit Binance as rumors of insolvency linger (more in DeFi & CeFi)
- Number of addresses in a loss have fallen drastically after BTC’s overnight jump (more in On-Chain)
- BTC and ETH volatility rose during CPI release before coming back down after US trading hours (more in Crypto Derivatives)
- BTC and ETH post-CPI rally stop short at their 50-d MA (more in Crypto Technical Analysis)
Macro & TradFi
A downside surprise from US Nov CPI (7.1% actual vs 7.3% consensus) triggered massive swings in global risk assets; stocks and bonds blew out higher initially, retracing almost all of the post-CPI gains, then regained momentum to close marginally higher on the day. Fed’s meeting minutes will be the next heavily eyed item as the Fed Funds futures now price in a 53% chance of only 25bps hike and a 40% chance of another 50bps hike in Feb meeting. Meanwhile, Beijing’s spike in infection numbers has cast doubts on China’s reopening, leading to the Central Economic Work Conference being postponed. Vice Premier Sun Chunlan, however, still said the country should shift focus to treatment from prevention. On the geopolitics front, the US is ready to send Patriot air defense missiles to Ukraine pending President Biden’s final approval.
US indices had a rollercoaster ride overnight; NASDAQ rallied as much as 4% post-CPI before closing only 1% higher and DOW gave up a 700 points rally to close merely 0.45% higher, while SPX forgone intraday gains too closing 0.85% higher. US Treasury bonds managed to cling to most of the gains; 10-year yields dipped as much as 20bps before closing 10bps tighter. Funny enough, a Bloomberg report revealed that a massive flow bought $1m DV01 in US 10y Treasury futures seconds before CPI, netting a $10m profit in minutes. Gold, oil and other commodities rallied as DXY weakened.
DeFi & CeFi
- SBF charged with defrauding investors by the SEC
- Bored Ape Yacht Club 24-hour trading volume up by 81.54%
- Binance net outflow hits $3.6 billion over the past 7 days, $1.14 billion in the past 24 hours
- Binance temporarily paused USDC withdrawals to do a token swap
- Stable coin total supply plummeted from $142 to $69.2 billion in the past 2 days
- Tether to reduce balance sheet exposure to secured loans to zero in 2023
- Nillion Closes $20m funding round involving Hashkey
Binance has experienced $1.14 billion in outflows in the past 24 hours, as insolvency fears from the FTX debacle still linger. USDC withdrawals were also temporarily put on hold, further exacerbating fears that Binance reserves were drying up. Binance CEO CZ responded to the net outflows positively, saying that it could be a good stress test that proves Binance is solvent. Binance has also released an audit report to prove that its BTC is overcollateralized and is not concerned about being insolvent.
Looking at On-chain, BTC number of addresses in a loss has reached a 1-month low after last night’s CPI release.
Elsewhere the number of USDT deposits in exchanges has shot up significantly, showing risk sentiment increasing as investors move funds to exchanges to redeploy their capital.
- BTC and ETH funding rates turn positive after CPI data release
- BTC and ETH 7-day ATM IV rose yesterday night before falling after US trading hours from 64 to 52, and 85 to 71 respectively
- BTC 30-day 25 delta put skew remains tight in 8-10% range, similarly for ETH
Future liquidations on Tuesday amounted to $132M, 76.4% of them being short positions.
BTC term structure remains in contango with a kink on the 30th December expiry while IV has risen across the board for expiries after 30th December. Likewise for ETH, term structure remains in contango. While 15thDecember expiries no longer show a large spike, IV across the board from 23rd December onwards have risen more.
On the flows side, the top traded instrument for BTC has been 16 Dec 17.5K calls, reverse call calendar spreads and bull diagonal spreads. Open interest for calls has increased the most at the 17.5K-18K strikes. For ETH, 27 Jan 1.5K calls have been the most traded instrument in the last 24 hours, while bear diagonal spread calls and reverse call calendar spreads have also been the most traded strategies. Open interest has increased significantly between the 1.3K-1.4K strikes.
Crypto Technical Analysis
Looking at TA, BTC soared 3.27% higher to $17.7K. It reached an intraday high of $18.1K after a lower-than-expected CPI print and is currently testing its 50-d MA. On the daily, RSI has finally broken above the neutral level after consolidating for 2 weeks. The indicator has reached a three-week high at 58. If the bullish momentum continues, price could be set to test the resistance zone of $18.2K-$18.6K.
Similarly for ETH, it jumped 3.59% to $1.32K after reaching an intraday high of $1.35K. It has recaptured the $1.3K level and is currently trading within the resistance zone of $1.3K-$1.34K. Depending on the outcome of the FOMC, ETH could look to test the upper bound of its resistance zone if the committee is more dovish than expected.
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UK to say soon how it will extend energy support for businesses-Hunt
Biden says inflation going down but do not take anything for granted
Investors eye year-end rally as stocks pass week's first test with tame CPI
Argentina inflation to cool slightly on food price freezes, analysts say
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Bankman-Fried Lawsuits Expose FTX's 'Special Treatment' of Alameda Research.
Starlink, Verizon 5G and Crypto: What the New ‘War of the Currents’ Means for Decentralization.
Binance's CZ Welcomes 'Stress Test' as Exchange Resumes USDC Withdrawals.
Silvergate Shares Drop to Fresh 2-Year Low Amid FTX Testimony.
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Treehouse Research 🌳