🌳 BOJ Considers Ending ETF Purchases Amid Inflation Goals; 'Dencun' Upgrade Finalized, Reducing Ethereum L2 Transaction Costs

14 Mar 2024, Thursday

2:46 AM

🌳 BOJ Considers Ending ETF Purchases Amid Inflation Goals; 'Dencun' Upgrade Finalized, Reducing Ethereum L2 Transaction Costs



S&P Futures 500







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

  • BOJ rethinks ETF purchases as inflation targets loom; US House challenges TikTok's operations (More in Macro & TradFi)
  • Dencun upgrade activated; Michael Saylor’s MicroStrategy plans to buy more BTC (More in DeFi & CeFi)
  • ETH outflows from exchanges continue to increase; Memecoins surge following new BTC ATH (More in On-Chain)
  • BTC IV declines slightly while the term structure returns back to a pure contango state (More in Crypto Derivatives)
  • BTC and ETH continue to move sideways, potentially indicating a weakening demand (More in Crypto Technical Analysis)

Macro & TradFi

The Bank of Japan (BOJ) is reportedly considering ending its exchange-traded funds (ETF) purchasing program, initiated in 2010, as it approaches its inflation target. This consideration emerges amid observations that continued ETF acquisitions are unnecessary for limiting risk premiums in a thriving market. Simultaneously, the BOJ expects to maintain its commitment to stabilizing the bond market, indicating a readiness to intervene against sharp yield increases. This strategic shift reflects the BOJ's nuanced approach to monetary easing, differentiating its tactics between the equity and bond markets. The potential cessation of ETF buying coupled with the BOJ's unique position as a major central bank involved in stock fund purchases for inflation targeting, underscores a pivotal moment in Japan's monetary policy evolution.

Elsewhere, The US House of Representatives has taken a decisive step against TikTok, passing a bill that mandates the sale of the video-sharing app by its Chinese owner, ByteDance Ltd., or face a ban in the US. This move, supported by a 352 to 65 vote, signifies a major escalation in the scrutiny of TikTok, used by 170 million Americans, over national security concerns. The bill's future in the Senate remains uncertain, with some members opposing it despite President Joe Biden's willingness to sign it into law. This legislation highlights the growing tensions between the US and China over technology and security and underscores concerns regarding foreign influence and data privacy on American soil. Critics argue that the bill could infringe on First Amendment rights, signaling a potentially contentious legal battle ahead. The rapid passage of this bill reflects bipartisan concern over TikTok's influence and the perceived threat it poses to national security, making it a landmark effort to regulate the influence of a major social media platform with ties to China.

Lastly, US stocks closed mixed as the S&P 500 pulled back from a record high achieved in the previous session, experiencing a decrease of 0.19%. The Nasdaq, despite outperforming, also faced a downturn with a decline of 0.83%, while the Dow Jones Industrial Average saw a modest rise of 0.1%. Energy stocks led the broader market, driven by a jump in oil prices. Valero Energy, Marathon Petroleum, and APA Corp all posted significant gains. However, Tesla led the losses among mega-caps with a substantial drop of 4.54%. AI favorites, Nvidia and AMD, also saw a reduction in their recent upward trajectories, falling by 1.12% and 3.93% respectively. Investors are now focused on the forthcoming US economic indicators, including Retail Sales, PPI, and Initial Jobless Claims data, due today, which is anticipated to provide further insights into the economic landscape and potentially influence market dynamics.

CeFi & DeFi

  • Dencun update has been activated
  • MicroStrategy continues to buy more BTC
  • South Africa poised to license 60 crypto firms
  • Ethereum staking protocol Swell unveils over $1B TVL
  • OKX gets an in-principle license in Singapore as a Major Payment Institution

The 'Dencun' upgrade has been finalized, introducing the "proto-danksharding" feature. This development establishes a new, less costly space on the blockchain for data storage, known as "blobs," segregating it from regular transaction data. The upgrade is particularly advantageous for layer-2s such as Arbitrum and Optimism, which can reduce their data fees substantially. These networks serve to aggregate transactions and settle them in bulk on the Ethereum main chain, and with the 'Dencun' upgrade, Ethereum takes a significant step in mitigating its high transaction costs, which is expected to benefit the end-users with reduced Layer-2 gas fees.

In other news, MicroStrategy, headed by executive chairman Michael Saylor, continues to aggressively expand its Bitcoin holdings, now embarking on its second fundraising venture in March with a proposed $500 million convertible notes offering to procure more Bitcoin. The announcement follows a recently completed $800 million raise that saw the acquisition of an additional 12,000 BTC, elevating their Bitcoin reserves to a value of $15 billion—a 117% gain from their initial investment. As the firm approaches the milestone of owning 1% of Bitcoin's maximum supply, MicroStrategy's aggressive investment strategy signifies a robust confidence in Bitcoin's long-term value, mirrored by a 254% rally in its stock since early February.


The on-chain data for Ethereum presents an intriguing narrative of confidence among its investors, especially in the aftermath of the FTX incident. The decline in Ethereum's reserves across spot exchanges, as shown by persistent large outflows and the steady increase in the total value staked. Currently, with over 31 million Ethereum staked, the sentiment from the community appears to be positive, signaling a bullish consensus on the network's intrinsic value and its staking fundamentals. The shrinking exchange reserves also suggest a reduced selling pressure within the market, leading to a potential price surge should this trend persist.

According to an analysis done by Santiment, the memecoin sector has seen a significant surge, accompanying Bitcoin's climb to a new all-time high above $73.6K. This correlation suggests a trend where, in the current bullish climate, profits from Bitcoin's ascent are swiftly channeled into speculative, low-liquidity assets, notably meme coins, which have recorded an estimated 8.5% increase over the past week. This pattern indicates that investors are willing to diversify their portfolios and engage with riskier assets, hinting at a redistribution of capital within the market.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH decreased to 77.16% and 72.94%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC decreased to 3.64% while ETH remained mostly unchanged at -2.22%.
  • The futures market witnessed $220.63M in liquidations, with longs representing 53.56%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On














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.

Bitcoin ATM Implied Volatility (IV) is currently at the 7-day IV of 70.63% and the 30-day IV at 74.16%. Although these IV levels remain elevated historically, both the 7-day and 30-day IVs experienced a noticeable decline in recent days. This suggests a potential decrease in options demand as Bitcoin volatility has weakened over the past few days.

The term structure of Bitcoin has reverted to a complete contango state, with the curve remaining relatively flat for longer termed tenures, indicating a lack of option purchases for long-dated expiries.

BTC 25 Delta skews (C-P) remained relatively unchanged compared to the previous day, with BTC skews decreasing to 3.10% for 7-day maturities and 3.64% for 30-day maturities. This indicates that option investors are largely bullish on BTC, although there have been increasingly more purchases of puts to maintain delta neutrality. 

Lastly, during the Asia/EU Trading Session, @Paradigm reported option flows emphasizing strategic call purchases and structured positions. Key BTC trades encompassed the procurement of 200x 26-Apr-24 63/90k Bull Risk Reversals sold and 200x 29-Mar-24 70/75k Call Spreads sold. In ETH, noteworthy movements included 2000x 26-Apr-24 5k Calls bought and another 2000x 31-May-24 4.8k Calls bought.

Crypto Technical Analysis

Onto technical analysis, BTC continued to move largely sideways yesterday despite inching slightly higher and achieving a new all-time high. The immediate resistance lies at the upper trendline formed by the local higher highs, potentially encountering resistance at the $74K level. Meanwhile, the $69K to $70K range continues to serve as potential support if the price retraces.

Moving on to ETH, its price struggled to make a definitive breakthrough above the $4K level. The price was rejected at the previously mentioned upper trendline formed by the higher highs since the flash crash last week, which could signal that purchasing demand might be weakening. The $4.2K resistance level observed in December 2021 remains the immediate resistance zone if the price increases above the $4K level. On the flip side, ETH may find support at the lower trendline formed by recent higher lows, within the $3.75K to $3.8K range if the price retraces before testing the horizontal support zone at $3.5K to $3.55K.

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