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
- The Fed may pause interest rates in its upcoming meeting; Trump indicted with 37 charges regarding the illegal retention of classfied documents (more in Macro & TradFi)
- Crypto.com halts service for US institutional clients; SOL, MATIC, and ADA publically disagrees with the SEC’s classifications of “securities” (more in DeFi & CeFi)
- Tether in circulation reaches all-time highs; Miners’ BTC transfers to exchanges continues to trend higher (more in On-Chain)
- Implied Volatility comes alive with spot market dump; The flippening is finally here as EVIV surpasses BVIV (more in Crypto Derivatives)
- BTC, ETH, and the ETH/BTC pair all display developing bearish tendencies, underscored by dips below key Moving Averages (more in Crypto Technical Analysis)
Macro & TradFi
In anticipation of its upcoming meeting, the Federal Reserve is expected to pause interest rate hikes. However, Jerome Powell will need to address concerns from some officials who believe that progress in reducing inflation has stalled and that more actions may be required to cool the economy. While there has been a consensus among policymakers on the need to bring down inflation, differing views are emerging on how much further the Fed should go, which could lead to dissent in future meetings. One key question is whether the recent strains in the banking sector are contributing to a pullback in lending, which could impact credit conditions and the wider economy. Powell will need to effectively communicate that the Fed's pause in June does not indicate a complete halt to rate hikes. He may use the press conference to emphasize the possibility of a hike in July, and policymakers could update their economic forecasts to signal expectations of higher rates. The release of the May consumer price index report during the meeting could also influence the Fed's decision, with a higher reading increasing the likelihood of another rate hike.
In addition, former President Donald Trump has been indicted on 37 charges on Friday related to the illegal retention of classified documents after leaving the White House. The indictment, unsealed by a federal judge in Florida, includes allegations of willful retention of national defense information, conspiracy to obstruct justice, withholding and concealing documents, scheming to conceal, and making false statements. Former U.S. Attorney General William Barr has described this federal indictment against Donald Trump as "very, very damning." Barr, who served as Trump's attorney general, rejected Trump's claims that the charges were politically motivated and stated that presenting Trump as a victim of a witch hunt is ridiculous. Trump, in response, criticized Barr, calling him a coward who failed to perform his duties.
Finally, the major US equity markets experienced minimal movement during Friday's trading sessions. The S&P 500 (SPX), Dow Jones Industrial Average (DJIA), and NASDAQ concluded with gains of 0.11%, 0.12%, and 0.15% respectively. Analysts anticipate a subdued opening on Monday as investors await crucial inflation data and other significant events scheduled for the week, including PPI figures, retail sales reports, and unemployment filings.
DeFi & CeFi
- Bitcoin dominance highest level since April 2021 for nearly half the crypto market
- Crypto.com to suspend service for US institutional clients
- Solana, Cardano, Polygon dispute SEC’s 'security' label
- US Commodity Futures Trading Commission wins lawsuit against Ooki DAO
- Hong Kong Monetary Authority plans to push implementation of retail e-HKD ahead
- Alibaba's e-commerce platform removes content related to NFT launch
- European Union's Crypto Asset Markets Law (MiCA) officially published
- FTX authorized to ‘permanently redact’ names of individual customers
Crypto.com will be shutting down its institutional exchange service for US customers on June 21, 2023 due to 'limited demand' in the 'current market landscape', according to a statement from the company. The lack of demand mentioned in the statement can likely be attributed to the ongoing lawsuits against major exchanges Binance and Coinbase. The Singapore-based crypto exchange clarified that this decision does not affect its retail trading app or its regulated crypto derivatives product, UpDown Options. While the institutional trading platform could potentially reopen in the future, no specific conditions were provided.
Elsewhere, the organizations behind Solana (SOL), Polygon (MATIC), and Cardano (ADA) have responded to the SEC’s claim that these tokens are examples of securities being traded on non-compliant crypto exchanges in its lawsuits against Binance and Coinbase. Input Output Global (IOG), the creator of Cardano, defended ADA's regulatory status, asserting that it has never been considered a security under U.S. law. In addition, IOG expressed a willingness to collaborate with regulators to find a balance between innovation and consumer protection. The Solana Foundation, while refraining from outright denying SOL's status as a security, disagreed with the SEC's characterization of the token. Similar to IOG, the foundation emphasized its commitment to working with regulators to address regulatory concerns. These responses come in the wake of Robinhood's decision to end support for SOL, MATIC, and ADA due to the lawsuits causing uncertainty around these cryptocurrencies.
Shifting to on-chain operations, the amount of USDT in circulation has recently reached an unprecedented high of $83.35 billion, while the circulating supply of USDC is steadily declining. The contrast in their market capitalization began in the middle of last year and has gained momentum since the onset of the banking crisis in March this year, especially when the USDC briefly lost its peg due to the collapse of Silicone Valley Bank. According to @WClementeIII, this disparity reflects the easier accessibility to treasuries for US-based USDC holders and the regulatory uncertainty faced by Circle, which is based in the US. Furthermore, when we combine the market capitalization of both stablecoins, we observe that its growth is essentially stagnant.
Meanwhile, there has been a notable trend among miners who have been transferring a significant amount of BTC to exchanges. The largest inflow observed during the past week amounted to $70.8M, which stands as the third largest inflow ever recorded. It falls short by $30.2M compared to the highest inflow of $101M observed during the primary bull market in 2021. Despite this, the proportion of Bitcoin held by long-term holders and sent to exchanges remains remarkably low at 0.004%. This emphasizes resolute within this group, even during a period of heightened market turmoil, as they seem unfazed by the regulatory charges faced by Binance and Coinbase (@glassnode).
- BTC and ETH funding rates remain positive while alts are showing negative funding rates
- 30-day ATM IV for BTC decreases to 36.48% while it increased for ETH to 39.46%
- Deribit Implied Volatility Index (DVOL) for both BTC and ETH rose to 43.14% and 48.36%, respectively.
- 30-day 25-delta skew for both BTC and ETH is at -1.04% and -4.35%, respectively
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
During the past weekend in the futures market, an astonishing $510 million worth of liquidations occurred. The majority of these liquidations, amounting to $348 million, were long liquidations on Saturday, as the market experienced a significant decline. This marks the highest level of long liquidations witnessed in a single day over the past two months.
Implied volatility (IV) in the options market has regained its vitality, mirroring the resurgence of volatility in spot markets. This increase in volatility can be attributed to market uncertainty stemming from a series of lawsuits and the significant sell-off that took place last Saturday. The previously observed correlation between spot and IV, known as the "spot up-vol up" dynamic, has now reversed, with spot-IV correlation returning to negative territory. At the beginning of last week, both BTC and ETH had 30-day IV in the low 30's, but now it has surpassed 40%. As the sell-off intensified on Saturday, both BTC and ETH experienced a substantial jump in IV, particularly in the front-end, causing the term structure to flip in backwardation at the front of the curve. For instance, ETH's 7-day IV surged from 34% to 45.45% during the altcoin market's decline, while BTC's IV rose from 34% to 42%.
In another aspect, we are witnessing a flippening in IV as the EVIV has surpassed the BVIV, currently standing at 48.36% and 43.41%, respectively. For some time before the sell-off on Saturday, EVIV had been lower than BVIV. At times, the spread between them reached as wide as 3%, indicating a significant gap in the implied volatility of these two tokens, which have different historical betas and IVs.
As the market experienced a sell-off, it comes as no surprise that skew shifted towards put options for both BTC and ETH. This shift indicates a flight to protection, with traders rushing to purchase downside insurance. Notably, ETH is now reflecting a higher put premium compared to BTC. This subtle difference suggests a slight preference for BTC over ETH as the token to maintain a bullish stance on.
Onto the flow of options volume and premiums traded in the past 24 hours, there was a higher concentration of put options for BTC, particularly in tenors expiring in June and July. In contrast, for ETH, the majority of the volume also focused on put options but with earlier expirations at the June tenors.
Several notable block trades reported by @tradeparadigm indicate mixed sentiments. These include a trade involving the sale of 1,015x 16-Jun-23 25.5K/27.5K strangles on BTC as well as the purchase of 17,025x 30-Jun-23 2K calls
Lastly, it is noteworthy that despite upcoming significant macro events such as CPI and FOMC, along with the TGA refill, the VIX continues to sit below the 14% handle and closed at 13.83% on Friday.
Crypto Technical Analysis
On to technical analysis, we can observe a developing bearish channel pattern on the daily chart. This is further affirmed by the price trending below both the 50-day and 100-day Moving Averages (MAs), a potential signal for heightened selling pressure. In terms of specific price levels, the market seems to be garnering slight support at around the $26.3K mark. Conversely, a persistent resistance looms at approximately the $27.4K region. With respect to the Relative Strength Index (RSI), it is presently hovering at 41.39, which is below the median, reflecting a lack of strong momentum in either direction.
Analyzing ETH, its price has recently fallen below the 100-day Moving Average similar to that of BTC, implying a potential bearish sentiment among investors. The asset's price action continues to stay constricted within the boundaries defined by two major trendlines from 1.7K to 1.9K. Looking forward, the next considerable resistance could be encountered around the $1.6K mark, which coincides with the location of the 200-day Moving Average. Regarding the RSI, it has currently dipped to 38.66.
Delving into the ETH/BTC pair, it's noteworthy that the pair has recently breached the 200-day MA, indicating a possible shift in momentum to the bearish side. Additionally, ETH has witnessed a break below a symmetrical triangle pattern, typically a signal of a forthcoming trend reversal. At present, the ETH/BTC pair appears to be drawing support at the 0.067 mark. The RSI stands at 40.88, suggesting a lack of dominant momentum from either buyers or sellers. This could potentially lead to a period of range-bound trading or even a reversal in trend if other indicators corroborate this reading.
Access institutional-grade commentary on TradFi × Crypto markets
By Treehouse Research
Treehouse Research 🌳