🌳 China Introduces Capital Markets Reform Plan; Kraken Acquires TradeStation Crypto To Expand In The US

19 Apr 2024, Friday

2:50 AM

🌳 China Introduces Capital Markets Reform Plan; Kraken Acquires TradeStation Crypto To Expand In The US

BTC

ETH

S&P Futures 500

$62,698.60

$3,042.25

$5,023.75

(+1.96%)

 (+1.75%)

(-0.88%)

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 labor market remains strong while the housing market declines; China introduces capital markets reform plan (More in Macro & TradFi)
  • Kraken acquires TradeStation Crypto to expand in the US; Tether restructures to expand beyond stablecoins (More in DeFi & CeFi)
  • ETH fees at a low; BTC miners reduce selling pressure before halving (More in On-Chain)
  • IVs suggest nerves in the market; Shadow term structure shows backwardation (More in Crypto Derivatives)
  • BTC and ETH form new support levels, RSI level approaches oversold territory (More in Crypto Technical Analysis)

Macro & TradFi

The US labor market remains strong, as indicated by the unchanged number of initial jobless claims. However, the housing market is regressing due to higher mortgage rates. The number of Americans filing new claims for unemployment benefits remained unchanged at a low level of 212,000 for the week. This continued labor market strength, combined with high inflation, has led some economists to believe that the Federal Reserve will delay cutting interest rates until September. It also noted that even as labor supply has improved, various industries experienced persistent shortages in securing qualified candidates for specific job roles, including machinists, skilled trades workers, and hospitality personnel. As a result, jobless claims are expected to continue trending down, with a moderation in hiring rather than a surge in firings. Amidst ambiguity regarding the trajectory of future interest rate reductions, Freddie Mac, a leading mortgage finance agency, reported that the average interest rate for the widely-utilized 30-year fixed-rate mortgage has surpassed the 7% threshold. Leading to a 4.3% decline in existing home sales in March to a seasonally adjusted annual rate of 4.19 million units. Investors should keep an eye out for jobless claims next week as an indicator of the status of the labor market, and the US month-over-month core PCE price index on the 26th of April. 

In other news, in its decennial capital market reform plan, China aims to curtail years of speculative trading that have fueled volatile market cycles. The plan prioritizes value investing as a means of fostering market stability, over speculation. The State Council's recently promulgated "Nine-Point Guideline" outlines a series of initiatives designed to incentivize dividend distribution by corporations, enhance the quality of new stock issuances, and rectify shortcomings in corporate governance practices. Firstly, it seeks to promote transparency and encourage dividend payouts by mandating companies to disclose dividend plans prior to initial public offerings (IPOs) and distribute a larger share of profits to shareholders, penalizing those who fail to comply with these regulations. Secondly, the stricter scrutiny placed on IPOs and quantitative trading, often associated with smaller stocks, could potentially favor larger, more established companies. With the revision of delisting rules disproportionately affecting smaller companies. Thirdly, the guidelines aim to enhance the overall quality of companies entering the stock market through stricter listing requirements during the IPO process, potentially leading to a decrease in the number of IPOs, but those that do occur are likely to be financially stronger and more substantial entities. Finally, a core focus of the reforms lies in strengthening investor protection. The plan includes measures to curb manipulative practices by companies, such as stricter regulations on share sales by major stakeholders and harsher penalties for false financial disclosures or corporate mismanagement, fostering a more secure and trustworthy investment environment for market participants. 

Lastly, the U.S. stock market closed with mixed sentiment as investors focused on rising bond yields and uncertain oil prices. Despite the Dow Jones Average closing in the positive 0.06%, the S&P 500 and Nasdaq both posted a fifth straight session of declines, diminishing by 0.22% and 0.52% respectively. Moving on to the biggest market movers in the stock market, Genuine Parts Co (GPC) saw a significant appreciation of 11.22%, as financial analysts maintained their buy ratings on GPC and the company posted positive first-quarter results and full-year outlook. Conversely, Las Vegas Sand Corps (LVS) declined by 8.66% despite reporting impressive first-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate and increasing year-over-year.

CeFi & DeFi

  • Kraken acquires TradeStation Crypto to expand in the US
  • Tether reorganizes the entity  into 4 divisions
  • Mango Market exploiter found guilty of fraud and manipulation
  • Avail confirms airdrop plan, a week after the leaked screenshot
  • JPM predicts a price drop after the halving

Kraken has acquired TradeStation Crypto, the digital asset-focused division of online brokerage TradeStation, to enhance its regulatory licensing and expand its presence in the United States. The acquisition, which had not been publicly disclosed before, allows Kraken to leverage TradeStation Crypto's regulatory licenses across most U.S. states. This move comes as part of Kraken's strategy to accelerate its growth and introduce new product offerings in the U.S. market. While the financial terms of the acquisition were not disclosed, TradeStation Crypto's acquisition marks a significant step for Kraken as it seeks to solidify its position in the U.S. crypto market. Additionally, Kraken has been expanding its presence in the European Union through acquisitions and obtaining virtual asset service provider licenses across the region.

Meanwhile, Tether, the issuer of the largest stablecoin by market cap, has reorganized its structure to reflect its expanding focus beyond stablecoins. The company has formed four divisions: Data, Finance, Power, and Edu, each representing a different aspect of its broadened mission. The Data division will focus on strategic investments in technology like artificial intelligence, while Finance will oversee the USDT stablecoin, crucial in crypto markets. Power will encompass investments in Bitcoin mining, and Edu will handle educational activities. Tether's expansion beyond stablecoins signifies a shift towards sustainable solutions, including responsible Bitcoin mining and AI infrastructure.

On-Chain

On-chain data from Santiment reveals that the Ethereum network has witnessed a significant decline in transaction fees, now costing only $2.07 on average, which marks the lowest level since January. This fee reduction aligns with a noticeable downtrend in market sentiment, as fees typically spike during periods of high demand and optimism, peaking at $15.21 on March 4th. The current low fees may suggest the market is at or near the bottom, following a 25% price drop in Ethereum over the past five weeks, indicating a cooling-off phase after the previous high demand.

Also, on-chain data preceding Bitcoin's halving event indicates a strategic reduction in selling pressure from miners, traditionally seen as a preparatory move ahead of the anticipated drop in mining rewards. The average amount of Bitcoin sent to exchanges by miners has decreased significantly from February's figures, suggesting miners may have pre-emptively offloaded holdings to safeguard against the expected decline in revenue post-halving. This reduction in miner-induced market supply, coupled with the market's prevailing risk-averse sentiment, could present a stabilizing factor for Bitcoin's price in the near term.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remain flat at 70.50% and 74.84%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC recovered to -2.18%, while ETH remained at -7.06% in the negatives.
  • The futures market witnessed $173.52M in liquidations, with longs representing 53.7%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

12.61%

SOL

Bybit

OKX

12.09%

BNB

OKX

Bybit

10.96%

BTC

dYdX

OKX

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 implied volatility chart reflects the market's nervous anticipation ahead of the BTC halving. The recent increase in short-term IV on the chart signals that traders are expecting big moves around the halving period. Adding to the mix, rising geopolitical tensions between Iran and the US are likely causing a spike in hedging activities which can also push the IV higher.

The Shadow Term-Structure chart shows that the market is undergoing backwardation. Investors are pricing in short-term uncertainties, leading to an increased demand for short-dated options. The curve shows that short-term implied volatilities (IV) have spiked, overshadowing the market IV, while long-term expectations appear more stable with a slight downturn observed in the last 24 hours.

The BTC 25-delta skew indicates a swing towards positive sentiment, with the 7-day skew recovering to -1.82% and the 30-day improving to -3.14%, amid growing investor interest ahead of the Bitcoin halving and increased geopolitical tensions between Iran and the USA. This trend suggests traders are pricing in potential upside risks associated with the halving event and seeking a hedge amid international uncertainty.

@Paradigm trading activity included the buying of 325x 26-Apr-24 $58K Puts, a 300x 26-Apr-24 $65K/10-May-24 $70K Call Calendar, and 200x 26-Apr-24 $64K Calls, while 200x 26-Apr-24 $64K Calls were sold, and a 200x 31-May-24 $57K Put was bought. ETH options were not far behind, with trades involving the selling of 1750x 26-Apr-24 $3K Puts, buying of a 1250x 26-Apr-24 $3.8K/28-Jun-24 $3.2K Put Calendar, and the selling of 1000x 31-May-24 $2.7K Puts.

Crypto Technical Analysis

Moving on to TA on BTC’s 4-hour chart, BTC's price action over the past few days has created a critical support level in the range of $60.7K to $59.6K. With the BTC price currently positioned at $60.3K near the support area, the next few days remain critical for investors to look out for. Should BTC decline further past this support barrier, the subsequent key support level is at the $52.5K mark, a 12.9% decline, represented by previous resistance levels formed in February. Conversely, if bulls were to take over, it could face resistance at $67.1K, a 10.6% upside. The RSI stands at 38.69, suggesting that we are potentially approaching oversold conditions.

Analyzing ETH’s 4-hour chart reveals a pattern reminiscent of BTC’s price action, with new support levels forming in the $2.97K to $2.88K range. Currently, ETH is positioned at $2.88K, in line with the lower boundary of the established support zone. In the event of a continued downtrend, the next support level is anticipated at around $2.69K, a potential 6.5% downside. The immediate resistance is around $3.6K, marking a 25% upside and a level that ETH briefly touched on 11 April. The RSI has declined to 35.89, hinting at a potential oversold condition that could entice buyers looking for value entry points. Given the prevailing dominance of the BTC and ETH narrative without significant catalysts, investors are advised to exercise caution in the ETH market.

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