🌳 Japan Prepares For Measures To Counteract Yen’s Decline; Kucoin And Its Founders Charged By The US For Violations Of AML Laws

27 Mar 2024, Wednesday

2:51 AM

🌳 Japan Prepares For Measures To Counteract Yen’s Decline; Kucoin And Its Founders Charged By The US For Violations Of AML Laws

BTC

ETH

S&P Futures 500

$70,592.66

$3,614.87

$5,276.25

(+1.00%)

 (+0.52%)

(-0.19%)

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


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What We Are Covering Today

  • Japan prepares for measures to counteract Yen’s decline; Policy shifts jolt yuan market as China adjusts fixing (More in Macro & TradFi)
  • Kucoin charged in the US for violations of AML laws; SEC is looking to fine Ripple with $1.95B (More in DeFi & CeFi)
  • Spent Output Profit Ratio (SOPR) increases; Mean Dollar Invested Age indicator on a decline (More in On-Chain)
  • BTC’s 25 Delta skews 7-day maturities slip to negative territory; BTC term structure maintains contango shape (More in Crypto Derivatives)
  • BTC consolidates post-rejection at $72K; ETH shows resilience, eyes $4K resistance (More in Crypto Technical Analysis)

Macro & TradFi

Japan has signaled its readiness to deploy any necessary measures to counteract the yen's decline, as stated by Finance Minister Shunichi Suzuki. This stance comes amid a pivotal transition from Japan's long-standing policy of low-interest rates to a tighter monetary stance, marked by the Bank of Japan's first rate hike since 2017. The weakening yen, while benefiting exporters, poses risks to the economy by increasing import costs and impacting household wealth. Suzuki emphasized the importance of stable currency movements aligned with economic fundamentals, highlighting the adverse effects of rapid fluctuations on business and economic stability. The possibility of intervention in the currency market remains open, especially if the yen's volatility continues, reflecting a proactive approach to maintaining economic balance and mitigating speculative pressures.

In other news, traders are having a tougher time figuring out China's foreign exchange policies, which are getting more opaque. This sentiment stems from volatility in China’s yuan daily reference rate. Policymakers initially sparked a selloff in the yuan by weakening the official exchange rate. However, they managed to reverse the trend and trigger a rebound by setting a stronger rate over the following two days. Equivocal communications from policymakers have further exacerbated the uncertainty surrounding the yuan exchange rate. This is exacerbated by China's already challenging economic climate, characterized by a pessimistic growth outlook, negative investor sentiment, and resurgent strength in the US dollar. Such conflicting pronouncements elevate the potential for significantly more pronounced fluctuations in the yuan's value if policymakers opt to loosen their grip on foreign exchange controls.

In other news, in Wednesday’s trading session, the three major indexes experienced a pullback after hitting record highs last week. The Dow Jones Industrial Average, S&P 500 Index, and Nasdaq slipped by 0.08%, 0.28%, and  0.42% respectively. Spice maker McCormick & Company (MKC) delivered strong results for the first quarter of fiscal 2024. Both revenue and earnings per share (EPS) grew compared to the same period last year and exceeded analyst expectations according to the Zacks Consensus Estimate. This translates to appreciation for its stock to grow by 10.52% to $77.30. Seagate Technology's stock price surged by 7.38% to $94.75 after Morgan Stanley boosted its rating on the company, a maker of computer hard drives, from "equal-weight" to "overweight.". Meanwhile, United Parcel Service (UPS) tumbled by 8.16% to close at $143.79 after unveiling their 2026 forecast prioritizing high-margin parcels and aggressive cost-cutting.  Market sentiment is cautious as investors will be glued to economic data releases, including jobless claims, gross domestic product (GDP), and consumer sentiment released this Thursday. With the market closed on Good Friday, all eyes will shift to Friday morning's reports on February's U.S. Personal Consumption Expenditures price index, which could influence the Federal Reserve's rate cut timeline.

CeFi & DeFi

  • Kucoin and its founders charged by the US for violations of AML laws
  • SEC seeks a $1.95B fine against Ripple
  • Galaxy Digital reported strong earnings 
  • Tidal and Hashdex announce trading of spot Bitcoin ETF
  • Microstrategy stock reaches a new all-time high

U.S. federal prosecutors have leveled serious charges against crypto exchange KuCoin and its two founders for allegedly violating anti-money laundering laws, stating the exchange as a "multibillion-dollar criminal conspiracy." The indictment alleges that KuCoin operated as a money-transmitting business with millions of customers, yet failed to implement adequate know-your-customer (KYC) or anti-money laundering (AML) programs until 2023, leaving it vulnerable to exploitation by criminals seeking to launder illicit funds. The exchange is accused of indirectly receiving millions of dollars worth of cryptocurrency from sanctioned sources, including the crypto mixer Tornado Cash. The Commodity Futures Trading Commission (CFTC) also filed a suit against KuCoin, alleging failure to register and implement proper KYC procedures for futures trading services. Both agencies are seeking substantial penalties and forfeiture. 

Meanwhile, the U.S. Securities and Exchange Commission (SEC) is seeking a hefty fine of $1.95 billion against Ripple Labs in the ongoing legal battle between the two entities. The SEC's proposal includes $876 million in disgorgement, $198 million in prejudgment interest, and a staggering $876 million civil penalty. This latest development comes after the SEC filed suit against Ripple Labs and its executives in December 2020, alleging violations of federal securities laws related to the sale of XRP. While Ripple's chief legal officer, Stuart Alderoty, criticized the SEC's stance and pledged to file a response next month, the SEC emphasized the importance of sending a strong message against such conduct in the crypto asset space.

On-Chain

The latest data from Glassnode suggests a significant shift in BTC investor behavior, with an observable uptrend in profit-taking activities. The Spent Output Profit Ratio (SOPR) metrics, which track the profit or loss status of BTC transactions, indicate that a considerable portion of the 2 million BTC with a cost basis above $61.2K has been spent recently. The suite of SOPR variants in the chart shows a trend of realized profits. Currently, all SOPR variants are reaching relative highs, with the Entity-Adjusted SOPR nearing levels last seen during the peak of the 2021 bull run. This surge suggests that the market participants are increasingly looking to capitalize on gains, as evidenced by the larger volume and higher magnitude of Bitcoin being moved and sold in the spot markets. Such behavior can reflect both a short-term desire to capitalize on current prices and a broader sentiment that the market may be reaching a local peak, prompting investors to secure their gains before any potential downturn.

In another analysis by Santiment, the on-chain data highlights the third-largest BTC transaction in the past two weeks, where a substantial amount of 15,411.92 BTC changed hands. This sizable movement trails to the two enormous transactions totaling 87,051.03 BTC and 78,317.03 BTC that occurred on the same date. Over the weekend, there appeared to be a trend of accumulation in larger wallets, hinting at a bullish sentiment among key investors. Furthermore, the Mean Dollar Invested Age indicator has been trending downwards, as shown in pink. This movement indicates that the average age of invested coins is decreasing, meaning older, previously dormant coins are re-entering circulation.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC dropped to 75.75% while ETH increased to 79.11%.
  • The 30-day 25-delta skew (C-P) for BTC and ETH slipped to 1.95 and -3.93%, respectively.
  • The futures market witnessed $180.43M in liquidations, with longs representing 59.17%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

26.77%

DOGE

Binance

dYdX

26.32%

AVAX

Binance

dYdX

25.89%

AVAX

OKX

dYdX

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.


Bitcoin (BTC) ATM Implied Volatility (IV) chart shows the 7-day maturities declining further to 65.70 while 30-day maturities have remained relatively unchanged at 74.98. The decrease in anticipated short-term volatility indicates that market participants are currently assigning a low probability to substantial price fluctuations, and potential anticipation by the market of forthcoming short-term economic data releases in the United States. These reports, including the US GDP growth rate and core personal consumption expenditures, could introduce volatility, and the market may be hedging against this possibility.

The term structure in the chart maintained its contango shape with volatility in short-term tenures of up to 30 days, which gradually normalized over the longer-term tenures. This suggests that traders expect significant short-term events, prompting a higher premium on options that expire soon.

Today's BTC's 25 Delta skews illustrate both the 7-day and 30-day maturities slipping to -0.07 and 1.85, respectively, with the former entering negative territory. This suggests that options investors have turned more bearish on the price of BTC in the short term while maintaining a favorable outlook on the price over the medium term. 

In today's trading session, @Paradigm reported for BTC, a 314x 24-Apr-24 90K/75K/60K Put Butterfly Spreads sold, and a custom strategy of 300x -1.00-Put-29-Mar 24 65K +3.00-Put-26-Apr 24 50K bought. For ETH, a 11902x 26-Apr-24 3.1K/2.6K Put Spread was bought and a 4000x 5-Apr-24 3.25K Put was bought.

Crypto Technical Analysis

In technical analysis, BTC was rejected at the $72K level, with the market currently in a consolidation phase around the $70K mark. This consolidation indicates a pause as the market absorbs the recent price surge to the $72K resistance. Should this consolidation result in a downward breach, the next support is identified to be $68K, a decrease of approximately 2.86%. Conversely, should the price overcome the resistance, the next notable resistance lies at $72K. Meanwhile, the Relative Strength Index (RSI) stands at 65.27, exhibiting an uptrend momentum. The RSI's current position above the midline but below the overbought threshold suggests a growing bullish sentiment without immediate signs of being overextended. Investors will closely monitor these levels and the RSI trend for signs of either continuation or reversal in the prevailing trend.

The 4-hour chart for ETH demonstrated price resilience as it stabilizes around the $3.62K level after experiencing a slight pullback from last night. The market's behavior indicates a potential consolidation phase at this juncture. A decisive move beyond this point could pave the way to challenge the next resistance at $4K, equating to a rise of approximately 10% from the current price. Should the market sentiment shift and sellers take control, we might expect to find support at the $3.4K level, implying a potential 6% retreat. The RSI stands at 60.46, indicating a neutral momentum trend with a slightly overbought condition presently presiding over the market. Market participants will likely scrutinize this balance in momentum, alongside the $3.62K level, to discern the market's next directional bias.

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