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Our Daily View
What We Are Covering Today
- China’s foreign minister abruptly removed from position; Google beats revenue and profit consensus despite the competition from AI chatbots (more in Macro & TradFi)
- Optimism develops Fraud Proof System; EDX Markets integrates with Talos and expands access to institutional trading (more in DeFi & CeFi)
- BTC whales dormant for a decade begin moving funds; Short-term holders (STH) whales see a significant increase in dominance (more in On-Chain)
- IV trends lower as BTC trader sentiment shifts to a neutral skew (more in Crypto Derivatives)
- BTC and ETH struggle to find support following Monday’s decline; DOGE rips higher amidst Twitter X rebranding (more in Crypto Technical Analysis)
Macro & TradFi
China's foreign minister, Qin Gang, was removed after only seven months, marking the shortest-ever tenure for the role. Qin mysteriously disappeared from public view in June, and the abrupt personnel change was announced without an explanation, leading to speculation about possible reasons, such as illness or political factors. His predecessor, Wang Yi, will replace him. China's choice to change its foreign minister will not significantly alter China's foreign policy, which is dictated primarily by President Xi Jinping. The need for more information surrounding Qin's situation raises concerns for investors about data gaps and policy volatility in the world's second-largest economy.
In other news, Alphabet Inc., the parent company of Google, reported second-quarter revenue that exceeded analysts' expectations, primarily driven by strong advertising on its flagship search business. The company's sales, excluding partner payouts, reached $62B in the quarter, beating the projected $60.2B. Notably, search advertising performed well, generating $42.6B. Despite new competition from artificial intelligence chatbots, Google's search business has remained resilient. Net income was $18.37B, surpassing Wall Street estimates, and the company's cloud unit and YouTube division also performed strongly. Chief Financial Officer Ruth Porat will also take on a new role as president and chief investment officer. Alphabet's Other Bets segment, including projects like Waymo and Verily, generated $285M in revenue while narrowing its losses to $813M.
U.S. stocks saw gains on Tuesday, with the Dow Jones Industrial Average rising 0.1%, the S&P 500 gaining 0.3%, and the Nasdaq Composite climbing 0.6%. 3M shares surged 5.3% despite a quarterly loss, leading the Dow industrials. On the other hand, Raytheon Technologies slumped 10% due to a potential production flaw with its Pratt & Whitney jet engines. The market demonstrated stability, marking the Dow's 12th consecutive day of gains, its longest winning streak in six years. Investors continue to focus on the conclusion of the Federal Reserve's meeting and the potential interest rate hike on 27th July.
DeFi & CeFi
- Optimism is developing the fraud-proof system to decentralize the OP Stack
- EDX markets integrates with Talos
- Game Delabs Games Closes $4.7M seed round
- Worldcoin faces regulatory scrutiny amid community backlash on privacy concerns
- Avalanche Foundation allocates $50M to on-chain asset token purchases
- Japan’s PM describes Web 3 as a “new form of capitalism”
Optimism revealed in a recent blog post that their ecosystem's developers are creating a Fraud Proof System for the Optimistic Stack. This comprehensive system includes various components, like the Fault Proof Program (FPP), Fault Proof Virtual Machine (FPVM), and the Dispute Game. These fraud proofs, pivotal to the Optimistic Rollup solution, will act as validation mechanisms while synchronizing Layer 2 data to the Ethereum mainnet. It is worth noting that the fraud-proof system by Optimism has yet to officially launch its fraud-proof system, leaving users to trust the accuracy of the Layer 2 data that is being synchronized to Ethereum.
EDX Markets (EDXM) has announced its integration with Talos, an established provider of institutional trading technology for digital assets. This collaboration enables EDXM to utilize Talos' comprehensive trading platform, thus broadening customer access to many liquidity venues. EDXM emphasizes that Talos is the very first Order and Execution Management System (OEMS) to be integrated into its platform, providing EDXM with connectivity to over 40 providers, including top-tier exchanges, custodians, and market makers. EDXM, an exchange serving enterprise clients on a non-custodial basis, was officially launched in June with financial backing fromreputed entities, including Paradigm and Sequoia Capital.
Several long-dormant Bitcoin wallets holding over 2,000 BTC have been moving in the past week after years of inactivity. On July 20, two wallets from 2011, each containing 10 BTC, moved their holdings, followed by another wallet holding 5 BTC the next day. Then, around $30.3 million worth of Bitcoin (1,037 BTC) moved from an inactive wallet since 2012. Finally, on July 24, a wallet from 2010 moved 50 BTC, valued at $1.4 million. The recent movement of holdings has been part of a "dramatic uptick" in whale activity, with some moving their holdings to exchanges, possibly for cashing out or diversification to alternative assets.
Short-term holders (STH) of Bitcoin, classified as whale entities have seen a significant increase in dominance across exchange inflows, reaching 82%, far above the long-term range of 55% to 65%. These newer investors are actively trading local market conditions, with each rally and correction resulting in 10k+ BTC upticks in STH profit or loss. The net profit/loss bias for coins sent to exchanges by STHs indicates extremes of locking in high profits or losses, with the Short-Term Holder SOPR providing additional confirmation on profit taking.
- Funding rates remain positive for both BTC and ETH
- Deribit Implied Volatility Index (DVOL) is at 37.68% and 37.59% for BTC and ETH respectively
- 30-day 25-delta skew (C-P) for BTC and ETH is at 1.25% and -1.08% respectively
- The futures market witnessed $39.32M worth of liquidations on Tuesday with longs representing 56.4% of the total
Top 3 CEX USDT perp funding rate arbitrage based on the last 24-hour lookback:
Net Annualized APR
Perp (USDT pair)
Source: @CexyArbBot Telegram
1) Pairs observed include BTC, ETH, SOL, BNB, XRP, LTC, DOGE vs USDT perps
2) CEX observed include Binance, Bybit, OKX & DYDX
@CexyArbBot allows you to customize CEX, 100+ pairs & lookback periods combo
The ATM IV for BTC has increased for 7-day contracts as the market anticipates higher volatility with the Fed’s decision on the potential rate hike. 30-day contracts, on the other hand, have yet to react, with it dropping slightly compared to the previous day. The overall figure, however, has continued to be in a downtrend in the past month as the price stabilized around the $30K level for an extended period.
The term structure continues to be in contango with IV dipping for shorter tenors. The higher short-expiration IVs suggest anticipated short-term price fluctuations, likely influenced by the upcoming US stock market earnings week. Throughout the curve, Bitcoin's IV remains loftier than ETH. The high IV triggered a haven bid in BTC, majorly steered by call flows. The market seems to view Bitcoin as a relatively safer haven, especially amid economic uncertainties.
Yesterday, the 7-day skew for short tenors in BTC briefly shifted towards put skews but regained ground by the day's end. The declining 30-day skew suggests a wane in positive trader sentiment, although longer tenors remain resilient. Meanwhile, Ethereum's persistently negative skew across durations underscores its perceived elevated risk. The potential vulnerabilities further fuel the perception of its higher risk, especially as BTC and ETH prices are on the verge of breaking down at their horizontal support levels.
Highlighted by @paradigm, trading volumes have surged in recent days. They are centering around a marked uptick in buying activity centered on ETH options set for March expiration. Concurrently, there's a notable offloading of Vega tied to Ethereum call options in August and September, aggregating to a sale of -$111K in Vega. For BTC flows, dominant trades included the sale of a 500x Call Calendar for 29-Dec-23 at $40K / 29-Mar-24 at $50K. There was a purchase of 300x outright Calls for 25-Aug-23 at $30K and a 200x Call Spread 25-Aug-23 at $30K/$33K strikes. On the ETH front, prominent trades include the purchase of 21,750x Call Spreads for 29-Mar-24 at $1.9K/$2.8K strikes and the selling of 750x Calls for 29-Sep-23 at $2.2K. In summary, the prevailing trade flow hints at complex market sentiment, deftly balanced between speculation and hedging.
Crypto Technical Analysis
As we shift our focus to technical analysis, we see that major blue chips continue to trade slightly lower after Monday’s decline. Looking at the daily chart, BTC remains steadfast around its $29K level and is presently trading both the 21-day Simple Moving Average (SMA) and the May open level below. BTC must surpass the May open level and potentially re-enter the established trading range of the past few weeks to achieve a significant recovery following the recent decline on Monday. Failing to do so might result in BTC experiencing a potential decline towards its April open, which hovers around $28.4K.
Meanwhile, ETH is trading below its 21-day SMA and heading toward the upper quarter of its high time-frame trading range on the daily chart. If ETH finds strong support at this level and experiences a significant bounce, it may gain upward momentum toward its yearly highs of $2.14K, which coincides with the range high for the year.
Elsewhere, DOGE has been experiencing a consistent upward trend in the past week, trading above the 21-day Simple Moving Average (SMA). Particularly noteworthy is its substantial price surge of over 10% on Tuesday, which coincided with the Twitter X rebranding and Elon Musk's inclusion of the Dogecoin logo on his X page. With this significant upward momentum, DOGE will potentially continue to ascend, aiming to breach its resistance level at 0.08900.
Access institutional-grade commentary on TradFi × Crypto markets
By Treehouse Research
Treehouse Research 🌳