🌳Global Stock Market Surges After Softer Than Expected U.S. Job Opening Data; First Bitcoin ETF Could Be Coming Soon As Court Rules In Favor Of Grayscale Over SEC

GM Treehouser 🌳

Welcome to our Treehouse Daily newsletter, where Treehouse brings you financial news and insights free daily! We believe you’ll find this helpful.

Also, in case you have missed it, check out our latest research piece 👇

Our Daily View

What We Are Covering Today

• Global stock market surges after softer than expected U.S. job opening data; China pledges greater policy support and government spending (more in Macro & TradFi)
• First Bitcoin ETF imminent as court favors Grayscale over SEC; $USDT used for illegal activity in Southeast Asia (more in DeFi & CeFi)
• Shaky $CHZ deposits, monitoring is advised; $ETH surges 5% and whale activity resurges as Grayscale wins SEC lawsuit (more in On-Chain)
• Heightened near-term volatility reflected in BTC and ETH options; skew differentials suggest divergent trader sentiment (more in Crypto Derivatives)
• Bullish signal across the board as BTC and ETH broke through their prior resistances (more in Crypto Technical Analysis)

Macro & TradFi

The U.S. job opening data for July reported a figure of 8.83M, considerably lower than the consensus of 9.465M. The Labor Department's JOLTS survey revealed a decrease in the quit rate to 2.3% from the pandemic-driven peak of 3%, while the hiring rate reached its lowest point since April 2020. These factors point to reduced labor demand and more favorable hiring conditions, aligning with the Fed's goal of curbing inflation without drastic unemployment increases. The "Beveridge Curve," reflecting the relationship between job openings and unemployment, has also moved towards 2019 levels. This trend is notable across various sectors, suggesting a broad softening of the labor market. Despite fluctuations in consumer confidence and debates among economists, the data offers the Fed some leeway in maintaining interest rates to manage inflation.

On the other hand, China's economic recovery is showing signs of strain, prompting top officials, including Finance Minister Liu Kun and Zheng Shanjie from the National Development and Reform Commission, to pledge strengthened policy support and an acceleration of government spending. While these remarks mirror Beijing's existing stance, they emphasize the need for intensified counter-cyclical measures and coordinated policies throughout the year. The impending Communist Party’s Politburo meeting is expected to be instrumental in setting future economic strategies, especially with the central bank cutting interest rates twice this year. This comes against a backdrop of economists adjusting growth projections for China, taking into account weakened exports, subdued consumer spending, and an intensifying property crisis, bringing growth expectations closer to the government's 5% target for the year.

U.S. stocks rose following a backdrop of subdued U.S. job opening data. The S&P 500 extended its upward surge for the third successive day, marking a notable 1.45% increase, while the Nasdaq Composite experienced a significant ascent of 1.88%. The DJIA also participated in the upward trend with a climb of 0.85%. Meanwhile, Asian markets, especially in China, experienced growth following Beijing's initiatives to stabilize its financial markets, including a notable reduction in its share trading levy, the first since the 2008 crisis, with the CSI 300 index soaring up to 5.5% before finishing at 1.2%.

DeFi & CeFi

• First bitcoin ETF could be coming soon as court rules in favor of Grayscale over SEC
• $115B $USDT used for illegal activity and gambling, $14.6B contaminated $USDT flowed into CEX
• Bitcoin-friendly presidential candidate Francis Suarez drops out of race
• Polygon releases 'Chain Development Kit' for ZK-Powered networks on Ethereum

The U.S. Court of Appeals for the D.C. Circuit has ruled in favor of Grayscale in a lawsuit against the SEC, paving the way for Bitcoin exchange-traded funds (ETFs). Major cryptocurrencies like Bitcoin and Ether surged on the news. Coinbase, a custodian partner in spot Bitcoin ETF applications, rose more than 14% on Tuesday. The court stated that the SEC failed to provide a coherent explanation for why it approved Bitcoin futures exchange-traded products (ETPs) but not Grayscale’s proposed Bitcoin ETP. The SEC’s enforcement action is seen as unlikely to succeed further, and experts believe the agency may accept the decision and allow the spot Bitcoin ETF. This ruling could be a positive sign for other companies similarly pursuing spot Bitcoin ETFs, like BlackRock and Fidelity.

On to other news, blockchain analysis firm Bitrace has reported Tether (USDT) being widely used for illegal and gambling activities in Southeast Asia. Bitrace uses high-risk on-chain address data and automates trace analysis technology to monitor these flows and identify cryptocurrency funds associated with illegal activities. It found that over $37.16B USDT was related to online gambling funds, $69.78B USDT to money laundering, and less than $460M USDT to fraud. More than $14.64B USDT comprising funds from similar illegal activity flowed into centralized trading platforms from known Southeast Asian entity-associated addresses. The circulation of contaminated USDT has inadvertently linked many addresses and platforms with transactions on illegal platforms.

On-Chain

According to @lookonchain, two sizable $CHZ deposits were made to Binance in the past 24 hours, hinting at potential fluctuations within the ecosystem. Notably, the Chiliz Multisig wallet transferred 25M $CHZ, valued at approximately $1.53M, and this was closely followed by Wintermute Trading, which deposited an even larger sum of 28M $CHZ, equivalent to $1.71M. Such substantial transfers, especially in close succession, could be indicative of strategic market positioning, and warrant close monitoring by major stakeholders and investors.

On the other hand, the price of $ETH immediately surged ~4% upon the announcement that Grayscale had won its lawsuit against the SEC. Closely following this news, @lookonchain observed a whale who spent $13.66M USDC to purchase 8,000 $ETH. This intersection between positive macro news and whale movements signifies strong bullish sentiment and leads to anticipation for further positive price action for $ETH.

Crypto Derivatives

• Funding rates for BTC and ETH remain positive.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH rose to 39.73% and 37.99%, respectively.
• 30-day 25-delta skew (C-P) for BTC jumped to 5.19% while ETH moved to 1.26%.
• The futures market witnessed $167.55M worth of liquidations with shorts representing 70.16% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Bitcoin's ATM IV has experienced a notable uptick. The 7-day ATM IV surged to 40% from its earlier 31.29%, while the 30-day ATM IV increased to 35.82% from 31.60%. This heightened volatility is likely attributable to Grayscale's recent legal victory over the SEC.

BTC and ETH term structures consistently exhibit contango, with a noticeable rise in IVs for near-dated options, signaling heightened short-term volatility expectations. Moreover, a substantial spread of around 8.8% between BTC and ETH across all tenors suggests that there are potentially differentiated hedging strategies by traders in response to these variances.

BTC's 30-day (C-P) skew has notably risen to 5.45, while ETH has advanced to 1.26. Concurrently, the 7-day skews for BTC and ETH have registered increases to 5.77 and 0.05, respectively. The pronounced differentials in 25d volatility and skew between BTC and ETH underscore BTC's superior spot performance and robust gamma activity.

Lastly, @Paradigm reported significant option flows following the news as traders place high bids for upside gamma. Noteworthy BTC trades include the acquisition of 500x 15-Sep-23 28000 Calls (tied), 500x 29-Sep-23 29000 Calls, and a structured position with the purchase of 300x 8-Sep-23 24500/26500 Put Spreads.

Crypto Technical Analysis

Moving on to technical analysis, recent news concerning the SEC and Grayscale exerted a strong bullish influence on the market. As a result, BTC surged past the previously established trading range spanning from $25.8K to $26.6K. Currently, it is encountering the resistance zone at $28.3K on the 4-hour chart. The RSI has undergone a significant uptick, reaching 72.12, indicating overbought conditions. Looking ahead, we can anticipate a minor price retracement following last night's substantial price spike. The 100 SMA and the upper boundary of the channel are now functioning as immediate support zones.

Shifting focus to ETH, the bullish outlook has intensified following yesterday's news. The previous analysis materialized as ETH broke above the upper boundary of the triangle. While the pace of price acceleration has moderated, there are no evident immediate resistance levels discernible from a technical perspective using the 4-hour chart. The nearest resistance zone lies approximately within the $1.86K to $1.88K range, observed from late last month to early this month. This represents a potential 9% upside from the present level. Nonetheless, a slight retracement is likely before the bullish momentum resumes, coinciding with the 100-SMA line.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Chinese banks to cut existing mortgage rates as property crisis deepens

• Germany agrees 32 bln euro tax cuts to give economy 'big boost'

• Fed to keep markets guessing on rate pauses and cuts -former policymakers

• US labor market loses steam as job openings, resignations decline

• Key US jobs data boost Fed's 'soft-landing' hopes

• US companies in China struggle with raids, slow deal approvals, anti-espionage law

• US home prices show signs of stabilizing, reports show

• TSX rises to two-week closing high, Scotiabank jumps

• Oil rises 1% on softer dollar, US braces for hurricane hit

• China's factory activity likely extended declines in August - Reuters poll

• Nvidia's stock closes at record after Google AI partnership.

• Meta says it has disrupted a massive disinformation campaign linked to Chinese law enforcement.

Crypto

• First bitcoin ETF could be coming soon as court rules in favor of Grayscale over SEC

• Bitrace: $115B $USDT Used for Illegal Activity and Gambling, $14.6B Contaminated $USDT Flowed into CEX

• CBDC-Hating, Bitcoin-Friendly Presidential Candidate Francis Suarez Drops Out of Race.

• Robinhood and Jump Trading No Longer Have Crypto Partnership: Source.

• SEC's Secret Binance Court Filing Has Observers Bracing for Bad News.

• Polygon Releases 'Chain Development Kit' for ZK-Powered Networks on Ethereum.

• SEBA Bank secures in-principle nod for crypto services in Hong Kong.

• Elon Musk’s X moves closer to crypto payments with new state license.

• Tether adds Bahamas-based private bank Britannia as partner: Report.

• Crypto Payment Infrastructure Provider MoonPay Launches Investment Arm with Focus on Web3

• DWF Labs Withdraws 2M $CRV from Binance to On-Chain Wallet

• Friend.Tech Say Sorry to the Prior Statement of Punishing Users If They Use Copycat Apps

Deal Flow

• NFT Startup FirstMate Closes $3.75M Funding Round Led by Dragonfly Capital

Yours sincerely,
Treehouse Research 🌳