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
- Biden, McCarthy reach tentative debt ceiling deal; youth unemployment and industrial production point to slow recovery in China (more in Macro & TradFi)
Stably announces the launch of #USD, the first BRC-20 stablecoin; Beijing releases the “Web3 Whitepaper” outlining the future of the internet in China (more in DeFi & CeFi)
- Shrimp wallets aggressive BTC accumulation, BTC addresses activity rebounds, and a dormant Ethereum wallet transfers $14.8 million worth of Ether (more in On-Chain)
- Risk-on sentiment prevails as Call option activity surges for BTC and ETH (more in Crypto Derivatives)
- BTC and ETH surge higher on Monday Asian trading hours; ETHBTC struggles to sustain above key levels (more in Crypto Technical Analysis)
Macro & TradFi
US President Joe Biden reached a fiscal truce with Republican House speaker Kevin McCarthy, averting a potential US debt default. The agreement, seen as a bipartisan deal, came after intense negotiations and compromises. While Biden secured an increase in the borrowing limit until after the next presidential election, he faced criticism from progressive Democrats for making concessions in immigration and energy policy. The deal also includes limits on spending and new restrictions on eligibility for social safety-net programs, which drew opposition from left-wing groups. If the agreement fails to pass Congress, it could have severe repercussions on the economy, financial markets and US economic leadership.
On the other hand, China's economic recovery is faltering, causing uncertainty for graduates seeking jobs and dampening consumer confidence and private investment. Data has shown that industrial production and profits, property sales, and credit growth have all fallen short of expectations, impacting the growth prospects of the world's second-largest economy. This has led to a decline in markets, with the prices of copper and iron ore dropping, stocks falling, and the RMB weakening. Youth unemployment has reached a record high of 20.4%, while the broader labor market remains mixed. Despite the challenges, analysts believe that China's full-year growth target of 5% for 2023 is still attainable, given last year's low base. However, the changing priorities in the job market, coupled with the government's focus away from finance and internet platforms, have left many graduates struggling to find work or change jobs.
On Friday, the major indices rose after continued enthusiasm from the AI-related rally and hope that a debt ceiling deal would be reached: the Dow Jones Industrial Average rose 1.03%, the S&P500 index rose 1.30%, and the NASDAQ composite index rose 2.2%. Following the tentative agreement between U.S. President Joe Biden and congressional leaders to raise the debt ceiling over the weekend, Asia-Pacific markets are mostly in positive territory. The Nikkei 225 in Japan surged 2% at the opening, reaching levels not seen in 33 years, while the Topix index also experienced a gain of 1.26%.
DeFi & CeFi
- Stably announces the launch of Bitcoin Network stablecoin, #USD
- Tornado Cash governance to be restored with the approval of the hacker’s proposal
- Beijing publishes Web3 innovation and development white paper
- Binance Japan to launch in the coming weeks, following the acquisition of Sakura Exchange Bitcoin in November 2022
- a16z launches Solidity library, Cicada, for encryption of votes on Ethereum
- Jimbos Protocol hacked for $7.5M right after the launch of V2
- MakerDAO proposal suggests raising DAI savings rate to 3.3%
Stably, a leading provider of Stablecoin-as-a-Service, has launched Stably USD (#USD), the first USD-backed stablecoin as a natively-issued BRC20 token on the Bitcoin network. This groundbreaking development aims to revolutionize the Bitcoin ordinals ecosystem and enable on-chain trading using a stablecoin built on Bitcoin. #USD will have full backing from fiat USD reserves held in a US-regulated custodian's collateral account and can be issued and redeemed via Fedwire, SWIFT, USDC, and USDT in over 200 countries. Stably's collaborations with prominent ordinal projects like UniSat and Ordzaar, along with their plans for automatic issuance and redemption, demonstrate their commitment to driving global innovation and decentralized finance adoption.
Meanwhile, Beijing's municipal government has released the "Web3 Innovation and Development White Paper" to drive innovation and promote the Web3 industry. The white paper recognizes Web3 technology as a crucial trend for the future of the internet industry. The government plans to allocate at least 100 million yuan annually until 2025 to establish Beijing as a global hub for digital economy innovation. The document emphasizes policy support and technological advancements to facilitate the growth of the Web3 industry. The timing of the white paper's release coincides with Hong Kong's upcoming cryptocurrency regulations, indicating a potential shift in China's stance towards the industry. Additionally, state-owned China Central Television aired a segment featuring cryptocurrencies, including Bitcoin, suggesting increased attention and potential market impact.
'Shrimp wallets,' referring to wallets holding less than one BTC, consistently exhibit a strong pattern of acquiring more Bitcoin, with a monthly increase of 24.6K BTC. Among the 5,226 trading days observed from @glassdoor, only 224 (4.3%) have shown significant growth. This aggressive acquisition strategy has resulted in the Shrimp Entities accumulating a remarkable total of 1.31M BTC, reaching an all-time high in their holdings. Notably, a substantial portion of these trading days (160) occurred within the past year, suggesting that smaller investors may be entering the market as BTC prices decline. This trend indicates a positive sentiment regarding BTC's long-term potential.
In other news, an individual who took part in the Ethereum Initial Coin Offering (ICO) has transferred 8,000 ETH, valued at US$14.8 million, from an inactive wallet to a new address. This wallet had remained dormant since the Ethereum ICO in 2015, during which the tokens were acquired at an approximate price of $0.31 each. This investment has yielded an extraordinary return of 591,900% based on current market prices. Similar movements of significant ETH amounts from inactive wallets have been observed recently. However, the motive behind this consolidation remains unclear, as the Ether has not been sold or sent to a cryptocurrency exchange.
- BTC and ETH funding rates remain positive
- 30-day BTC ATM IV increased to 44.5% while ETH ATM IV increased to 43.47%
- Deribit Implied Volatility Index (DVOL) is 49.78% and 48.01% for BTC and ETH respectively
- 30-day 25-delta skew for ETH and BTC is neutral
Top 3 CEX USDT perp funding rate arbitrage based on 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 futures market saw $124.27M in liquidation yesterday with a significant proportion of 87.5% coming from shorts at $108.68M.
The options term structure for mid to longer-term tenors on BTC remained relatively stable while ETH declined over the weekend as House Republicans reached a tentative deal to address the nation's debt ceiling to avoid a default. This reduction in uncertainty in both the stock and crypto markets led to increased optimism over the mid to long term. The fall in implied volatility (IV) was more prominent for longer-dated options, indicating market optimism for the resolution of the debt ceiling debate and the avoidance of a U.S. sovereign debt default.
Near-term IV for BTC and ETH options spiked, particularly in the 7-day, 25 delta options, reflecting market anticipation of heightened volatility as the U.S. approaches the 5th of June, a crucial deadline related to the debt ceiling and characterized by Treasury Secretary Janet Yellen to reach a potential default if the debt limit is not raised. The increase in IV suggests market participants expect significant market movements in response to this impending deadline.
The 7-day 25-delta skew spread for BTC and ETH options shifted from positive skew to a more neutral position. This change indicates a shift in market sentiment, as traders have moved away from purchasing more put options to hedge against downside risk. The neutrality in the skew may suggest a preference for call options, possibly driven by positive developments or expectations in the market.
BTC options experienced significant trading volumes in call options over the past 24 hours, particularly for the 30 June 23 expiration date. Market participants displayed a bullish sentiment toward BTC in the short term, focusing on call options at the $30K and $35K strike prices. Notably, there was notable trading activity over the weekend for the 2 Jun 23 expiration, with significant interest observed in the $27K to $28K strike prices, highlighting the utilization of options strategies to capitalize on significant price movements.
Similar to BTC, ETH options also saw significant trading activity in near-term options. The 2 Jun 2023 30 Jun 23 expirations attracted notable volumes, with the majority of open interest concentrated between the $1.85K to $2K strike prices. This indicates traders' expectations of significant upside movement in the immediate near term for ETH. The observed bullish call option volumes underscore market participants' optimism and positioning for potential upward price movements.
Lastly, the VIX fell to 17.95.
Crypto Technical Analysis
Moving onto technical analysis, BTC on the 4-hour chart is exhibiting a steady recovery following its unsuccessful attempt to breach below the $26K support level. During Monday's Asian trading hours, BTC managed to break above the ascending trendline, indicating a potential for further upward movement with significant momentum. On a higher time-frame (weekly chart) BTC appears to be above its quarter-range, where a significant portion of its price movement has occurred since the notable surge towards $28K in mid-March. If BTC manages to hold and find acceptance above this critical quarter-range zone, there is a strong likelihood that BTC could sustain its momentum and rise towards the upper limits of its range at $31K.
In a similar vein, ETH demonstrated its resilience as it holds the crucial $1.8K support and surpasses the $1.9K mark during Monday's Asian trading hours. Furthermore, it also managed to break free from the descending trendline that had formed since mid-April. Zooming in on ETH's performance compared to BTC, we observe that ETHBTC previously surpassed the resistance level at 0.06789. Nevertheless, it was unable to sustain its position above this level and retraced below it. Currently, it is making another attempt to break above once more. This suggests that ETH bulls are struggling to sustain momentum against BTC, and this relative underperformance may persist going forward.
Access institutional-grade commentary on TradFi × Crypto markets
By Treehouse Research
Treehouse Research 🌳