🌳 Fed Reserve Changes Opinion On Rate Cuts; Franklin Templeton’s ETH ETF Appears On The DTCC Website

29 Apr 2024, Monday

2:55 AM

🌳 Fed Reserve Changes Opinion On Rate Cuts; Franklin Templeton’s ETH ETF Appears On The DTCC Website

Note: The S&P 500 E-mini Futures data is missing from 05:00 to 06:00 SGT on Saturday 27/04/2024 due to an issue with TradingView

BTC

ETH

S&P Futures 500

$63,224.19

$3,281.32

$5,142.50

(-1.60%)

 (+4.37%)

(+0.44%)

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

  • SEC’s sentiment leans towards an if and no longer when a rate cut happens; Oil prices continue to increase amidst shouts for greater sanctions on Iran (More in Macro & TradFi)
  • Franklin Templeton lists Ethereum ETF on DTCC; Google Cloud's Web3 portal sparked mixed reactions within the cryptocurrency industry (More in DeFi & CeFi)
  • Bitcoin whale activity wanes; retail accumulates amidst market fluctuations and learning curves (More in On-Chain)
  • Both BTC and ETH saw large increases in C-P skews following Franklin Templeton’s ETF listing on the DTCC website (More in Crypto Derivatives)
  • BTC consolidates with $66.6K resistance; ETH appreciated with next resistance at $3.6K (More in Crypto Technical Analysis)

Macro & TradFi

The Federal Reserve sentiment is shifting from the timing and number of potential rate cuts in 2024 to questioning whether there should be any rate cuts at all this year. With inflation reports from the first quarter showing disappointing results, the likelihood of maintaining the current high-interest rates is increasing. Fed Chair Jerome Powell has indicated that rates could remain elevated to combat persistent inflation, which is still above the Fed's 2% target. Despite earlier predictions by swaps traders and the Fed's own March projections of possible rate cuts, recent comments from Fed officials suggest a growing reluctance to lower rates. Notably, Fed Governor Michelle Bowman and Minneapolis Fed President Neel Kashkari have expressed concerns about inflation risks, potentially ruling out cuts for the year. The recent brisk pace of core inflation further supports this cautious stance. As the Federal Open Market Committee (FOMC) meets, they are unlikely to alter their rate projections this week, though they may adjust their policy statement to reflect these ongoing inflation concerns.

President Joe Biden's approach to managing U.S. gas prices has led to an 18% rise this year, mainly due to his lenient policy towards sanctions on oil exports from Iran, Russia, and Venezuela. This strategy is part of his broader effort to temper fuel costs but faces significant political hurdles due to recent geopolitical tensions, including a drone strike by Iran on Israel. This incident has led to increased calls from Congress for stricter sanctions on Iranian oil exports, especially with the upcoming U.S. election. Global events continue to drive fuel prices higher.

U.S. stocks closed higher on Friday, with the Dow Jones Industrial Average increasing by 0.40%, the S&P 500 rising by 1.02% and the Nasdaq Composite grew 2.03%, following positive earnings reports from tech giants. Alphabet's shares jumped 10% after announcing a first-ever dividend and a $70B buyback plan, while Microsoft's shares grew by 1.8% after surpassing earnings expectations. Other major tech stocks also saw gains, with Amazon up 3.4%, Nvidia rising 5.8%, and Meta Platforms marginally increasing by 0.4%. In contrast, Apple and Tesla saw declines of 0.3% and 1.1%, respectively. The positive market movement came amidst moderate March inflation data and expectations of a potential Federal Reserve rate cut in September, providing relief after recent economic concerns. Investors will be looking out for more earnings reports from the Magnificent 7, which are set to be released this week, along with US JOLTS Job Openings data due Wednesday at 22:00 SGT.

CeFi & DeFi

  • Franklin Templeton lists Ethereum ETF on DTCC
  • The launch of Google Cloud's Web3 portal sparked mixed reactions within the cryptocurrency industry
  • DOJ challenges motion to dismiss Tornado Cash co-founder’s charges
  • Yuga Labs announces another restructuring with layoffs

Franklin Templeton, a prominent asset management firm, has registered its Ethereum spot exchange-traded fund (ETF), designated as the Franklin Ethereum TR Ethereum ETF (EZET), on the Depository Trust and Clearing Corporation (DTCC) website. Notably, the DTCC is an important platform for securities transactions within the United States. The DTCC website frequently includes listings of securities deemed acceptable for trading and settlement on its platform. This encompasses ETFs that have successfully navigated specific registration or compliance procedures. However, the listing of the Franklin Templeton Ethereum spot ETF on the DTCC website does not mean Franklin's spot Ether ETF application to the United States Securities and Exchange Commission (SEC) will be approved. The SEC has extended the timeline to review the proposed rule change regarding the listing and trading of Franklin Ethereum Trust shares on the Cboe BZX Exchange to June 11, granting them an additional 45 days for evaluation. Investors should await the decision by the SEC as this would dictate the environment for which other industry giants could enter the spot Ethereum ETF race.

In other news, Google Cloud's recent foray into Web3, which materialized through the launch of a dedicated developer portal, has been met with mixed opinions within the cryptocurrency industry. This new Web3 portal provides resources including blockchain datasets, testnet tools on Ethereum testnets, and tutorials on creating nonfungible tokens (NFT). Some blockchain natives commented that Google is way behind in Web3 technology as it didn’t provide a support system for the most important cryptocurrency, the Bitcoin and lightning support system. Others who were more receptive to Google’s foray into providing resources in the Web3 ecosystem saw it as a development for the blockchain space. This initiative could potentially pave the way for other technology companies to provide similar resources and lead to increased understanding and adoption of Web3 technology.

On-Chain

According to @ali_charts, there has been a marked decrease in Bitcoin whale transactions (valued at over $1 million) since March 14. The correlation suggests that a resurgence in such transactions may act as a catalyst to boost Bitcoin prices. As whale movements can significantly impact the BTC market due to the substantial volumes they trade, their reduced activity could imply a period of consolidation or reduced market momentum for Bitcoin.

Meanwhile, according to an analysis by Checkmate, Bitcoin's retail investors, often characterized as quick to sell at the first sign of a market downturn, are currently in a phase of accumulation. Referred to as "shrimps", these investors are accumulating an impressive 12,200 BTC per month. Their recent activities, particularly post-ETF surge sell-offs followed by re-accumulation, suggest their evolving role as informed participants in the cryptocurrency market.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remain relatively flat at 56.68% and 65.48%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH increased to 0.77% and -1.58%, respectively.
  • The futures market witnessed $358.45M in liquidations, with longs representing 64.9%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

33.89%

BNB

Binance

Bybit

31.69%

BNB

OKX

Bybit

15.70%

XRP

OKX

Bybit

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.


Over the weekend, BTC's 30-day ATM implied volatility (IV) remained relatively stable, showing minimal changes. However, the 7-day IV experienced an increase from a low of 46.68 to its current level of 53.77. This uptick suggests a rise in uncertainty regarding the token's near-term price fluctuations, which could be influenced by the Federal Reserve's interest rate decision scheduled for Thursday.

BTC term structure also shows a contango shape with minimal changes in the last 24 hours.

In terms of the C-P skews, both BTC and ETH have experienced significant increases following the appearance of Franklin Templeton’s ETH Spot ETF on the DTCC website. After this development, the skew for both crypto majors rapidly transitioned from negative to positive territory. ETH, in particular, saw a more pronounced impact, with its 7-day skew surging from -10.17 to a peak of 5.5 within a few hours.

Lastly, @Paradigm reported low option trading activities following last Friday's slight dip. Moreover, most trading activities are concentrated on BTC, mostly consisting of upside buying towards June and September expiries. Some notable trades include the purchase of 408x  28-Jun-24  90K/110K Call Spread and 300x 27-Sep-24 80K Call.

Crypto Technical Analysis

Moving on to Technical Analysis, BTC’s price continues to consolidate at the $63K level. A clear resistance level for BTC can be observed at $66.6K, which if breached, could lead to a test of the subsequent resistance at around $70.9K, marking an approximate 12.5% increase from the current level. Meanwhile, the price finds immediate support near the $61.8K region, a decrease of about 1.9% if the downtrend continues from the previous week.

On the other hand, ETH experienced significant appreciation over the weekend following the news of Franklin Templeton’s ETH ETF. If ETH maintains its momentum, it will encounter a resistance level at $3.6K, representing a 12.5% increase. However, if it fails to sustain its position and bearish sentiment prevails, it has a support level of $2.9K, implying a potential decrease of approximately 9.3%. The RSI level is currently at 58.92 after briefly entering overbought territory.

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