S&P 500 Futures
Note: All percentages shown above are referenced to the previous business work day's 09:00 (GMT+8)
GM Treehouser 🌳
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Our Daily View
What We Are Covering Today
- Strong US retail sales data diminish hopes of a Fed pivot (more in Macro & TradFi)
- Lending arm of Genesis Global Trading temporarily halts withdrawals (more in DeFi & CeFi)
- On-chain data suggests BTC and ETH holders are moving coins off exchanges in droves (more in On-Chain)
- IV popped higher while put skew tightened as Genesis announced liquidity crunch; Downside flows dominate for near-dated expiries (more in Crypto Derivatives)
- BTC and ETH continue downside move after rejecting key resistances (more in Crypto Technical Analysis)
Macro & TradFi
GM! Yesterday retail sales came in hot, rising by 1.3% MoM, the largest increase in 8 months. This strong data indicates that consumer demand is not slowing down, which might fuel the Fed to continue its aggressive rate hikes. These hawkish views were supported by the New York and San Francisco Fed Presidents, with comments on the inevitability of a recession to bring inflation down, as well as how a pause is "off the table," diminishing hopes that the Fed might pivot anytime soon.
US indices tumbled on stronger-than-expected retail sales as the S&P 500 fell by 0.8%, the NASDAQ slipped by 1.54%, and the DJIA dropped by 0.1%. Among individual stocks, warnings of a weakening 2023 outlook by Micron and abysmal earnings from Target caused their share price to fall by 5.8% and 13% respectively. The 10Y treasury yield fell sharply by 9 bps to 3.68%, causing the 2s10s curve to invert by the biggest margin in four decades. Elsewhere, WTI Crude traded 1.7% lower amidst easing geopolitical risk, at $85.48 a barrel.
DeFi & CeFi
- Yearn Finance releases yBribe, a new bribe platform for Curve gauge voting
- Aave launches on Aztec, a privacy ZK-rollup L2
- Safe announces $1M grant to build better self-custody solutions
- FTX fundraising term sheet leaked
- Fantom plans on using ZK technology in the future
- FTX states that SBF is no longer a part of FTX and does not speak on their behalf
- Gemini halts Gemini Earn withdrawals
- Genesis Global Capital suspends redemptions and new loan originations
FTX drew up a fundraising term sheet and sent it out to potential investors. The letter offers two approaches, namely a conventional investment and an investment termed as "all together set" (AT). For the conventional investment, FTX will be splitting up investors into tranches, based on their investment vehicle (for e.g. equity) and size (more or less than $2.5B). FTX also suggest that they are open to further negotiation for better terms for the investors. For the AT investment, it works akin to a crowdfunding campaign with a minimum goal. It is stated that if the funds raised amounted to at least $6B, only then will the AT kick in. There are no tranches in the AT investment. However, you cannot specify your terms of investment and have to follow the majority. FTX also stated that it could swap debt for equity at a post-money valuation of $12B, which is 62.5% lower than its $32B valuation back in January.
Gemini Earn has paused withdrawals after Genesis Global Capital, their lending partner, halted redemptions. As such, Genesis will not be able to meet the 5 business days service-level agreement. Gemini stated that they are working with the Genesis team to enable withdrawals as quickly as possible. They also claimed that this does not affect other Gemini products and services.
Looking at on-chain data, BTC and ETH balances on exchanges just reached a 4-year low of 2,304,415.880 BTC and 19,197,903.605 ETH respectively. This comes amidst the continued distrust in CEXs after the FTX fallout, which might indicate that users are now withdrawing funds from exchanges in a bid for self-custody.
This is further supported by how the ETH Number of Addresses Holding 1+ Coins just reached an ATH of 1,695,161, as crypto owners are increasingly opting to custody their own coins.
- Funding rate remains negative on BTC and ETH
- 30-day IV rose for both BTC and ETH to 77.30% and 98.09%, respectively
- 30-day 25d put skew tightened for BTC and ETH to -17.73% and -24.13%, respectively
For futures, total liquidations came in at $62M, with the majority coming from long liquidations at $42M.
On the options front, IV spiked higher following news of Genesis' liquidity crisis, but its overall downward pressure remains. IV is still underperforming RV at the moment. Vol increased across the curve for both BTC and ETH, with the majority of the increase occurring on the 31 Dec expiry, causing the term structure to steepen further in backwardation. Put skew ensued following the Genesis news, as it tightened further to the downside, reflecting fears of further contagion from other companies affiliated to the FTX debacle.
SOL IV, on the other hand, remains in historically elevated territory, with 30-day ATM vols currently trading at 189%, albeit down from its high since 11 Nov.
Near-dated downside flows dominated the tape, with outright puts and put spreads purchased, implying a long gamma and short delta trade due to the short expiration. However, 1,350 contracts of calls were purchased on BTC 23K strikes for the 31 March expiries, indicating dip buying.
Crypto Technical Analysis
BTC is at $16,654 and has fallen by 1.31%. On the larger H4 timeframe, BTC continues to trade between the 17.6k and 16k range. However, on the H1, it is evident that price failed to break above the 17k resistance level and created a new lower low indicating that there could be further selling momentum back down to its 16k support level.
ETH is currently at $1,216 and dropped by 2.86%. Price had managed to successfully reject the 1,28k resistance level on the H1 and has also just created new lower lows indicating a continuation downwards on its bearish structure. Price is likely to hit below its 1.2k lows where it could go as deep as 1.1k testing its major lows created on 10 Nov.
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Stock market today: Dow stumbles on Micron-led tech slump, Target tanks retailers
Oil falls as geopolitical tensions ease, China COVID concerns return
BOJ Governor Kuroda repeats will to continue monetary easing
Analysis: Political gridlock may help U.S. stocks but inflation still in driver’s seat
Amazon lays off some devices unit staff as it targets 10,000 cuts
As FTX collapses, Temasek becomes latest backer to write down $275 mln funding
U.S. retail sales rise solidly; fourth-quarter GDP estimates raised
Fed’s Waller says he’s open to a half-point rate hike at December meeting
European markets close 1% lower as geopolitical tensions rise after Poland missile incident
Market Wrap: Genesis Withdrawal Suspension Looms Over Cryptocurrencies
Gemini, BlockFi, Genesis announcing new restrictions as FTX contagion spreads
Circle holds a little more than $10 million in FTX-related equity investments
Crypto Exchange Gemini Suffers $485M Rush of Outflows Amid Contagion Fears
DeFi Giant MakerDAO Speeds Up DAI Transactions and Withdrawals, Expands to Arbitrum, Osmosis
Genesis’ Crypto-Lending Unit Is Halting Customer Withdrawals in Wake of FTX Collapse
Treehouse Research 🌳