🌳Fed Maintains Interest Rates Amid Persistent Inflation, Economic Growth; SBF Jury Deliberates Verdict in High-Profile FTX Fraud Case

02 Nov 2023, Thursday

2:55 AM

🌳Fed Maintains Interest Rates Amid Persistent Inflation, Economic Growth; SBF Jury Deliberates Verdict in High-Profile FTX Fraud Case

BTC

ETH

S&P Futures 500

$35,474.50

$1,849.25

$4,267.00

(+2.71%)

 (+1.62%)

(+1.58%)

Note: All percentages shown above are referenced to the previous business work day's 09:00 (GMT+8)

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October 2023 Market Recap

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What We Are Covering Today

  • Fed holds rates steady amid economic growth; U.S. Treasury's borrowing plan in spotlight as rate hike cycle nears end (More in Macro & TradFi)
  • Sam Bankman-Fried on verge of tears as his lawyer concludes defense; SafeMoon executives arrested by US DOJ in fraud investigation, charged by SEC (More in DeFi & CeFi)
  • Ethereum network growth signals bullish sentiment as exchange supplies dip; RLB sees whale-driven rally with price surge and increased holdings (More in On-Chain)
  • BTC's IV rises post-FOMC meeting; short-term skew indicates bullish trader sentiment (More in Crypto Derivatives)
  • Both BTC and ETH have seen significant price upticks, with current prices hovering around their respective resistance levels (More in Crypto Technical Analysis)

Macro & TradFi

In its latest update, the Federal Reserve is expected to keep interest rates steady at 5.25% to 5.5%, maintaining the rate set since July. This steady approach comes even as inflation persists above the Fed's 2% target, while the economy displays strong growth, with a recent report showing a 4.9% increase in the last quarter. The Federal Open Market Committee (FOMC) appears to be approaching the end of its cycle of rate hikes and is taking a measured approach to monetary policy. Fed Chair Jerome Powell emphasizes the need to assess the impact of past rate increases before taking further action. With the consensus not predicting a rate change at this time, Powell is poised to adopt a cautious tone in his upcoming briefing, indicating that future decisions will depend heavily on incoming economic data.

Meanwhile, the U.S. Treasury's forthcoming borrowing plan, expected to include $114 billion in long-term debt issuance, is drawing significant attention amidst a substantial budget deficit now at $2.02 trillion. With the Fed nearing the end of rate hikes, ten-year Treasury yields have hit 4.9%, prompting speculation of a Treasury shift towards short-term bills. This speculation is against a backdrop of a recent U.S. credit rating downgrade and the Fed's significant monthly balance sheet reduction. Investors are alert for signals in February's refunding that could presage further long-term debt sales, a move that may drive yields over the 5% mark and stir market volatility.

Yesterday, the S&P 500, DJIA, and NASDAQ surged by 1.05%, 0.67%, and 1.64% respectively, buoyed by the Federal Reserve's hold on interest rates. Globally, the STOXX 600 and MSCI's global index also rose, by 0.67% and 0.94%. Technology stocks shone brightly, with the sector gaining about 2%, led by semiconductor firms: Advanced Micro Devices soared 9.7%, Micron Technology climbed 3.8%, and NVIDIA shares grew by over 3%.

DeFi & CeFi

  • Sam Bankman-Fried on verge of tears as his lawyer concludes defense
  • SafeMoon executives arrested by US DOJ in fraud investigation, charged by SEC
  • Taiwan police bust 324M USDT money laundering operation
  • FTX, Alameda wallets move more than $78M in crypto to exchanges
  • PayPal UK unit registers as crypto service provider
  • Attacker drains $2M from Onyx in exploit
  • Pyth announced 600M $PYTH token airdrop
  • Coinbase crypto futures for retail US traders goes live, includes 'nano' bitcoin trading

Sam Bankman-Fried (SBF), the former CEO of FTX, is awaiting the verdict in his trial over allegations of fraud and misconduct related to the collapse of FTX and Alameda Research, his crypto trading firm. SBF's attorney, Mark S. Cohen, delivered his closing remarks, emotionally pleading with the jury to find his client acted in "good faith" and that the events leading to FTX's bankruptcy were due to "real-world miscommunications" and "mistakes" rather than fraud. Assistant U.S. Attorney Nicholas Roos, who led the government's case, argued that "thousands of people lost billions of dollars" due to SBF’s actions. The jury is now deliberating its verdict.

The U.S. Department of Justice (DOJ) has arrested and charged the executive team of meme cryptocurrency project SafeMoon, with perpetrating a massive fraud on its investors. SafeMoon's CEO John Karony and CTO Thomas Smith were arrested, while creator Kyle Nagy remains at large. The SafeMoon executive team allegedly withdrew more than $200M from the project and misappropriated investors' funds for personal use. The charges include conspiracy to commit securities fraud, wire fraud, and money laundering. The Securities and Exchange Commission (SEC) also charged the defendants with securities violations related to the cryptocurrency’s unregistered sale. SafeMoon launched in 2021 with the promise that staked funds would be "locked" in a liquidity pool, but the SEC alleges that these funds were instead used for fraudulent activities.

On-Chain

According to @Santiment, data reflects a robust bullish sentiment for Ethereum, with a significant network growth marked by the highest number of new address creations since October 7th and a substantial rise in price above $1,800. The end of October saw more than 38,000 new addresses, alongside a notable drop in exchange supplies to 8.37%, a low not observed since Ethereum's initial trading days. This increase in network participation, combined with a decrease in available supply, underscores a strong investor confidence, potentially setting the stage for Ethereum's price to challenge the $2,000 level, indicative of an optimistic market outlook and a trend towards growth.

\

In-addition, @Lookonchain reports a significant rally in RLB with its value soaring by 15% to a record peak, paralleled by whale activity where 20.3M RLB worth 4.14M dollars were acquired in the last two days. Among these, Whale wallet (9x9x9) notably invested 1,230 ETH (2.22M dollars) in 11.28M RLB. This concentrated buying pattern suggests an uptick in bullish sentiment both for RLB's market potential and its perceived long-term value, indicating an overall market trend toward growth.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH rose to 60.10% and 55.49% respectively.
  • 30-day 25-delta skew (C-P) for BTC and ETH rose to 8.80% and 4.18% respectively.
  • The futures market witnessed $140.82M worth of liquidations since Friday, with shorts representing 64.54% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

30.58%

BTC

Binance

dYdX

17.58%

SOL

dYdX

Bybit

13.71%

ETH

Binance

dYdX

Source: @CexyArbBot Telegram Bot

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.

BTC's implied volatility (IV) increased over the past day, with the 7-day IV at 54.63%, and the 30-day IV reaching 55.94%. This could be possibly due to the Federal Open Market Committee (FOMC) finishing its penultimate meeting of 2023 with the decision to hold interest rates steady.

Meanwhile, while BTC’s term structure remains largely in contango, slight backwardations were seen with IV rising more across short to mid-term tenors, effectively making medium-term IVs higher than those of long-term contracts. This suggests traders anticipate more immediate volatility but expect stability in the longer run for BTC.

Both the 7-day and 30-day 25-delta (call-put) skews have risen significantly over the past day. In particular, BTC's 7-day skew, which reflects short-term trader expectations, has risen to 10.26, which marks the highest in the last 30 days. This suggests that options traders strongly favor calls in anticipation of further upsides.

During the US Trading Hours, @Paradigm highlighted a concentration on BTC strategies, primarily focused on November and December expiries. Notably, there was the purchase of a 409x 10-NOV-23 37500/40000 BTC Call Spread and a sale of a 312x 29-DEC-23 35000 BTC Straddle. Turning our attention to ETH, significant transactions include the acquisition of a 11750x 17-NOV-23 2000 ETH Call and an 8750x 17-NOV-23 1900 ETH Call.

Crypto Technical Analysis

Over the last 24 hours, the bullish scenario from our previous analysis has materialized. On the 4-hour chart, a substantial green candlestick has confirmed an upside breakout from the triangle pattern. The RSI has also entered the overbought zone at 70.87. Currently, BTC's price hovers slightly above the upper trendlines identified by the daily higher highs in July. If the price maintains its position above this resistance, BTC faces no immediate resistance apart from the daily timeframe range between $41.2K - $42.4K. This marks a potential increase of 15-19% from the current level, signaling another potential bull run. However, if the price retraces at this level, a short-term price reversal may lead it down to the $34.4K level. This level serves as strong support, denoting the intersection of the triangle and the lower trendline.

ETH has similarly shown a significant uptick, with the current price hovering just above the resistance at $1.85K. In the event of confirmation, ETH's next resistance zone could be in the range of $1.91K - $1.93K. This range holds historical significance, having been tested seven times between April and July. On the other hand, a bearish scenario remains a possibility, and the price may gradually move towards the support level at $1.74K. This level previously acted as a resistance zone and was last observed as such at the beginning of October, unless ETH successfully maintains its position above the current resistance.

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