S&P Futures 500
Note: All percentages shown above are referenced to the previous business work day's 09:00 (GMT+8)
GM Treehouser 🌳
Welcome to our Treehouse Daily newsletter, where Treehouse brings you financial news and insights free daily! We believe you’ll find this helpful.
Also, in case you have missed it, check out our latest research piece 👇
You can also access our research articles on the Bloomberg Terminal with the command “NH TRH < GO >"!
Our Daily View
What We Are Covering Today
- Chinese firms hit a three-year high in buybacks amidst market downturn; SEC’s new ruling aimed at enhancing stability (More in Macro & TradFi)
- Ripple ordered to submit financials for SEC scrutiny; Solana overcomes major network disruption (More in DeFi & CeFi)
- Miner’s net outflow since ETF approval; BTC active addresses peaks (More in On-Chain)
- Slight decrease in the short-term IV; 25-delta skew indicates divergent near-term and mid-term market sentiment (More in Crypto Derivatives)
- BTC forms a triangle pattern while ETH shows bullish signs as it moves above all 3 key SMA levels (More in Crypto Technical Analysis)
Macro & TradFi
Chinese companies have escalated share buybacks to a three-year high in response to a $7 trillion market downturn, with record expenditures in both mainland China and Hong Kong. However, the scale of these buybacks has been insufficient to significantly influence the broader market's performance, pointing to a greater need for robust state intervention and strategic policy support. This action reflects the companies' efforts to stabilize the market amidst ongoing challenges, yet underscores the complexity of addressing structural issues within China's financial markets.
The SEC has implemented a rule to enhance supervision over high-speed traders and some hedge funds in the $26 trillion Treasury bond market, aiming to increase stability after recent market disruptions. This regulation mandates these entities to register as dealers, promoting greater transparency and requiring them to maintain capital to back their transactions. This move targets firms that have grown influential in the Treasury market, traditionally dominated by banks but now heavily participated in by non-bank entities due to post-financial crisis regulations. The rule is part of broader efforts to bolster oversight of a crucial financial market, following instability episodes and concerns over the impact of leveraged trades by hedge funds.
The S&P 500 saw an uptick of 0.23%, closing at $4,954.23, with investors eyeing earnings and Federal Reserve cues on interest rates. Fed statements hinted at delayed rate cuts, influencing market sentiment. Significant contributions came from various sectors, notably GE HealthCare Technologies, surging 11.6% post robust earnings. The Dow Jones climbed 0.37% to $38,521.36, buoyed by airlines like Frontier Group Holdings, up 20.8%. The Nasdaq Composite inched up by 0.07% to $15,609.00. However, the Philadelphia SE Semiconductor index dropped by 1%, highlighting mixed market responses to earnings and Federal Reserve statements on interest rates. Investors will be looking out for the China CPI data on Thursday, 8 February at 09:30 SGT.
CeFi & DeFi
- Court orders Ripple to disclose financial statements to SEC
- Solana back up following major 5-hour outage
- Treasury Secretary Yellen says the U.S. needs better stablecoin regulation
- AI-generated fake IDs claimed to pass crypto exchange KYC
- EigenLayer removes all limits on LST pools until 9 February
- ENS partnered with GoDaddy to link domain names to Ethereum address
- MetaMask deal with Robinhood broadens crypto access
The U.S. District Court for the Southern District of New York Magistrate Judge Sarah Netburn mandated Ripple to submit its financial statements for 2022 to 2023 and details concerning institutional sales contracts to the Securities and Exchange Commission (SEC) by February 12. This directive aims to clarify if XRP should be classified as a security, particularly in light of Ripple's post-complaint activities and their compliance with regulatory standards. The SEC's lawsuit against Ripple, initiated in December 2020, revolves around allegations of offering unregistered securities via XRP tokens. Although a July 2023 summary judgment ruled XRP as a security only when sold to institutional investors. This case highlights the SEC's aggressive oversight of the crypto industry and also sets a critical precedent for defining the regulatory status of digital assets and the compliance obligations of entities operating within this evolving sector.
Elsewhere, the Solana network encountered a significant disruption on February 6 at 10:22 UTC, marking its first major outage of 2024. This incident led to a halt in block production on the mainnet beta, prompting immediate action from validators and engineers within the ecosystem. Validators worked on generating up-to-date copies of the blockchain's data based on the most recent information available before the outage. A new software version was released, incorporating fixes for the problem that caused the halt and the Solana network is now operational again. The outage, which has temporarily impacted crypto exchanges' operations, shows the ongoing struggles with network reliability that Solana has faced since its inception, despite its goals of providing scalable and efficient decentralized solutions. However, this collective effort to restore service highlights that the Solana validator community is responsive in maintaining network stability.
The introduction of Bitcoin ETFs in the United States has significantly impacted the flow of Bitcoin from miners to exchanges, with a notable $1B in BTC moving from miners' wallets to exchanges within the first 48 hours of ETF trading, which suggests they are selling mined BTC. This movement, as reported by Bitfinex Alpha, marks a six-year peak in miners' outflow, particularly highlighted on January 12, the second day of Bitcoin ETF trading. On-chain data, including those from Glassnode and CryptoQuant, underscored a trend of negative net outflows from miner wallets since the ETF approvals, with a significant decrease in miner reserves to 1.82M BTC, its lowest since June 2021. These outflows are attributed to miners' need for liquidity. Despite this, long-term Bitcoin investors seem to be holding onto their assets, as evidenced by a noticeable decline in the supply last active. This indicates a strong belief in Bitcoin's future value appreciation.
A separate analysis by CryptoQuant of Bitcoin's active address count reveals a dynamic landscape. In 2021, during the bull market, active addresses soared to 1.36 million, signifying peak engagement. As of February 6, 2024, the 100-day average has slightly dipped to 1.08 million from the 2021 peak, yet remains notably above previous years, suggesting enduring network activity. Despite the count dipping to $948k on February 6, 2024, this is seen as a potential market stabilization rather than a decline. This context suggests a promising outlook for Bitcoin, as there is sustained activity, even in the face of market fluctuations, showing the resilience and growing acceptance of Bitcoin as a staple in the crypto scene.
- Funding rates remained positive for BTC and ETH.
- Deribit Implied Volatility Index (DVOL) for BTC remained relatively unchanged at 42.77% while that of ETH increased to 44.81%.
- The 30-day 25-delta skew (C-P) for BTC and ETH returned positive, rising to 0.92% and 2.13% respectively.
- The futures market witnessed $71.95M liquidations, with longs representing 41.7%.
Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities
Net Annualized APR
Perp (USDT pair)
Source: @CexyArbBot Telegram Bot
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.
The ATM Implied Volatility (IV) of BTC appears to be stabilizing, hovering around 40%. This is likely due to the lack of major BTC catalysts in the near future, which may lead to large price movements indicating that the market has agreed on Bitcoin's short-term future price movements.
BTC's market term structure has preserved its contango state, characterized by a minimal decrease in the short-term IV for contracts expiring within the next 16 days.
The BTC’s 25-delta call-put skews exhibit a clear divergence, with the 30-day skews increasing positively to 0.75%, while the 7-day skew remains negative at -0.15%. This divergence indicates a short-term bearish sentiment as opposed to a more bullish outlook over a 30-day horizon. Traders looking at Bitcoin for the next month are more likely to bet it'll go up since they're paying more for call options. On the other hand, traders looking at the near-term timeline are more worried about a dip, since they're buying put options. This might be because things can change more quickly in the short term.
Lastly, during @Paradigm’s Asia / Europe Session Hours, key BTC trades included the purchase of 450x 28-June-24 40k/55k strangle and a 200x 29-Mar-24 33k/36k bull risk reversal. On the ETH front, notable activities were observed with a 6000x 29-Mar-24 2700 Call bought on ETH against 6000x 26-Apr-24 2800 sold.
Crypto Technical Analysis
In BTC's technical analysis, the market continues to exhibit sideways movement, with price oscillating within the $42-44K range. Despite the occurrence of a golden cross between the 50 and 200 Simple Moving Averages (SMA), signaling a potential bullish trend, the breakout remains uncertain amidst choppy market conditions. Recent price action has formed a triangle pattern on BTC's 4-hour chart, characterized by a rebound from the $42K support level followed by a slight retracement after testing the upper boundary. If the triangle pattern persists, the short-term outlook for BTC leans bearish, with immediate support expected around the $42K to $42.5K range, where the lower boundary, horizontal support zone, and psychological support zone intersect. However, a breakout above the triangle could lead to the next resistance level at $44K, a key level repeatedly tested since last December.
ETH displays a more bullish sentiment in its technical indicators. The lower trendline identified previously has proven to be a significant support level, with the price swiftly rebounding around $2.3K last night. Consequently, ETH has surpassed the 200-period Simple Moving Average (SMA) and is now positioned above all three key SMA lines on the 4-hour timeframe. RSI has also continued to rise, currently at 68.4 and approaching the overbought territory. As a result, ETH may soon encounter resistance around $2.4K, a level observed since late December. Conversely, if bears regain control of the market, the immediate support is expected around $2.32K, aligned with the same lower trendline.
Access institutional-grade commentary on TradFi × Crypto markets
By Treehouse Research
Treehouse Research 🌳