🌳China's October Metrics Show Economic Downturn; BlackRock in Talks with Market Makers for Bitcoin ETF Launch

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• China's October economic strain mirrors market response; Musk's rebranded 'X' faces valuation dive and revenue challenges (More in Macro & TradFi)
• BlackRock in talks with market-making heavyweights Jane Street, Jump, Virtu for Bitcoin ETF; Unibot exploiter swaps stolen crypto for Ether via Tornado Cash (More in DeFi & CeFi)
• Fresh whale wallet acquires 900K+ SUSHI, price surges +16%; XRP surges 25%, reaches $0.60 with record 10K+ wallets (More in On-Chain)
• BTC's term structure shifts to contango; options traders anticipate further BTC price upside (More in Crypto Derivatives)
• BTC breaks slightly above the previously identified triangle while ETH fails to bounce from the trendline to the upside (More in Crypto Technical Analysis)

Macro & TradFi

China's economic metrics signaled headwinds in October with the manufacturing PMI receding to 49.5 from September's 50.2, and the services sector notching 50.6, down from 51.7. Financial markets responded; the offshore yuan depreciated by 0.1%, the Australian dollar shed 0.2%, and Hong Kong-listed Chinese shares slid 1.7%. Concurrently, the mainland's CSI 300 Index declined by 0.8%. China’s 10-year government bond yield contracted by 2 basis points to 2.70%. As these figures emerge, there's growing expectation that the People’s Bank of China might step in with measures like cutting interest rates and tweaking banking rules. The subdued earnings from tourism during the Golden Week highlight the ongoing economic wariness.

Meanwhile, Elon Musk's rebranded platform, X (previously known as Twitter), has seen a dramatic decline in valuation to $19B, less than half of its $44B purchase price a year ago. Since Musk's takeover, the company lost over half of its advertising revenue, resulting in a 60% drop in sales and acquired a debt burden of $13B. Moreover, despite Musk's ambitious vision to transform X into an "everything app" with features like shopping and payments, less than 1% of users have adopted its paid subscription, yielding under $120M annually. CEO Linda Yaccarino recently brainstormed financial strategies and product innovations, including the potential launch of advertising tiers, amidst talks of possibly taking X public.

Yesterday, Tuesday, the DJIA, S&P 500, and Nasdaq climbed by 0.38%, 0.65%, and 0.48% respectively. Despite this, Caterpillar shares dropped 6.7% after a positive earnings report, facing concerns of reduced demand. Amgen’s stock fell 2.8% due to underperforming third-quarter medicine sales. Conversely, Pinterest soared, with shares up 19% after strong quarterly results. Market participants will be looking out for the Fed’s interest rate decision tomorrow at 2AM SGT.

DeFi & CeFi

• BlackRock in talks with market-making heavyweights Jane Street, Jump, Virtu for Bitcoin ETF
• Unibot exploiter swaps stolen crypto for Ether via Tornado Cash
• Tether reports $3.2B excess reserves, but lags in reducing secured loans
• Circle curbs stablecoin minting for retail users
• Spain brings forward MiCA crypto rules by six months after EU pressure
• CFTC pays whistleblowers $16M this year for mostly crypto tips
• Bitget, Floki teams accuse each other of manipulation after token listing
• SBF criminal trial moves to closing arguments

BlackRock has reportedly been in discussions with market-making firms, including Jane Street, Virtu Financial, Jump Trading, and Hudson River Trading, regarding potential roles as liquidity providers for its upcoming Bitcoin exchange-traded fund (ETF). These discussions come as the U.S. Securities and Exchange Commission (SEC) is considering multiple Bitcoin ETF applications, including BlackRock's. The involvement of such market-making firms is crucial for the creation and redemption of ETF shares, a mechanism that helps maintain the ETF's price in line with the value of its underlying assets. BlackRock and the mentioned market makers have not provided official comments on the matter.

In other news, Telegram chatbot Unibot has been exploited with the stolen funds being swapped for Ether (ETH) on Tornado Cash, a privacy protocol known for being involved in high-profile hacks and exploits including the notorious North Korean Lazarus Group. This comes after Unibot suffered an attack related to a token approval exploit during a transition to a new router and announced plans to reimburse any stolen funds. The price of the Unibot token has dropped nearly 25%, and the attacker's wallet holds just over $630K in crypto assets, with the majority in ETH and USDC.

On-Chain

Meanwhile, as reported by @lookonchain, wallet "0xCCb6" has been purchasing 900,514 SUSHI at an average price of $0.71 each, amounting to an expenditure of 640K USDC in just the past 6 hours. Concurrently, this wallet has been depositing USDC to platforms like dYdX using over 90 fresh addresses. This strategy indicates an attempt to potentially raise the SUSHI price and signals a bullish stance on the future potentials of the token.

In addition, according to @Santiment, XRP has witnessed an impressive +25% surge in just 12 days, pushing its market value to $0.60 for the first time since the significant drop on August 16th. This resurgence has been accompanied by increasing activity from whales, evidenced by a notable 255 transactions exceeding $1M USD. Furthermore, there’s a record-high with 277.62K wallets now holding at least 10K XRP, indicating heightened interest and confidence in the asset, which bring the token towards a positive trajectory.

Crypto Derivatives

• Funding rates remained positive for BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC remained relatively unchanged at 55.06% while that of ETH rose slightly to 52.03%.
• 30-day 25-delta skew (C-P) for BTC and ETH rose to 6.93% and 3.94% respectively.
• The futures market witnessed $100.78M worth of liquidations since Friday, with longs representing 65.25% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Over the past day, BTC's implied volatility (IV) increased slightly over the past day, with the 7-day IV at 49.97%, and the 30-day IV reaching 51.45%. This could be possibly due to Invesco and Galaxy’s joint spot Bitcoin ETF being added to DTCC’s site, which added a surge of speculation in the market.

Meanwhile, BTC’s term structure returned to contango with IV rising across all tenors. However, the IVs for longer-dated tenors saw relatively subdued increase which signals a prevailing caution among traders. A significant focal point of this cautious sentiment appears to be the upcoming US Treasury's auction, which market participants are closely monitoring for potential impacts on the cryptocurrency's trajectory.

Both the 7-day and 30-day 25-delta (call-put) skews have stayed relatively unchanged over the past day. In particular, BTC's 7-day skew, which reflects short-term trader expectations, has risen to 6.93. This suggests that options traders are still favoring calls in anticipation of further upside for BTC’s price.

During the Asia / Europe Trading Hours - 31-Oct-23, @Paradigm showcased a focus on BTC strategies. The main trades were centered around December expiries. This comprised the purchase of a 250x 29-DEC-23 36000 BTC Call and a 113x 29-DEC-23 32000/39000 BTC Strangle. On the other hand, for ETH, significant transactions included the sale of a 3750x 24-NOV-23 1650 ETH Call and the acquisition of a 1750x 24-NOV-23 1700 ETH Put.

Crypto Technical Analysis

On the 4-hour chart, the previous analysis remains valid for BTC with a slightly more bullish tone. Currently, BTC has inched slightly above the upper boundary of the previously identified triangle. However, confirmation is required to ensure that this represents an upside breakout. Additionally, a slightly downward-sloping channel has been identified on the 1-hour chart, with BTC currently hovering at the upper boundary. This suggests the possibility of a short-term price reversal, which may lead the price down to the $33.6K level. This level acts as strong support, with the lower boundary of the triangle intersecting with the lower trendline formed by the local higher lows. Conversely, if the price manages to breach the imminent upper boundary of the triangle, BTC's immediate next resistance is likely to be around $35.5K, corresponding to the upper trendline observed on the daily chart.

ETH, on the other hand, has exhibited a relatively bearish tone as indicated by the technical indicators. Notably, ETH didn't show an upward bounce from the lower trendline; instead, it continued moving sideways. Consequently, the price is likely to gradually approach the support level at $1.74K, which previously served as a resistance zone and was last observed at the beginning of October. However, in the event of a bullish scenario, the previously identified resistance at $1.85K remains in play, marking a near 2% potential upside.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Dozens of deaths reported in Gaza refugee camp airstrike; Israel says it killed top Hamas commander.

• Unions Are Winning Big for the First Time in Decades

• Zillow Plunges After Verdict on Real Estate Brokerage Commissions

• Chinese tech giant Alibaba launches upgraded AI model to challenge Microsoft, Amazon

• Biden will meet with China's Xi Jinping next month, White House says.

• Mexico's economy grows 0.9% in third quarter, exceeding forecasts

• Canada's economy stalls in August, seen slipping into recession in Q3

• Defense firm Leidos raises outlook on robust weapons demand

• Wall St closes higher on eve of Fed decision; investors assess earnings

• Asia markets gain ahead of manufacturing data, Fed decision.

Crypto

• BlackRock's Bitcoin ETF Might Have Trading Support of Heavyweights Like Jane Street, Jump and Virtu: Source.

• Circle Curbs Stablecoin Minting for Retail Users, Moving Closer to Tether's Practice.

• Tether Reports $3.2B Excess Reserves, but Lags in Reducing Secured Loans.

• Celestia Airdrops TIA Token as Network Goes Live, Claims Start of 'Modular Era'.

• Blockchain Startup Etherfuse Rolls Out Tokenized Bonds in Mexico Targeting Retail Investors.

• Spain Brings Forward MiCA Crypto Rules by Six Months After EU Pressure.

• Unibot Exploiter Swaps Stolen Crypto for Ether Via Tornado Cash.

• CFTC pays whistleblowers $16M this year for mostly crypto tips.

• Bitget, Floki teams accuse each other of manipulation after token listing.

• SBF criminal trial moves to closing arguments.

• Ethereum layer 2s will continue to have diverse approaches to scaling — Vitalik Buterin.

• Crypto startup Bastion secures money transmitter licenses in US.

Yours sincerely,
Treehouse Research 🌳