🌳 Japan’s Biggest Bank Readies For Rate Liftoff This Month; Bitcoin ETFs Saw Record Volumes Amidst Price Retracements

06 Mar 2024, Wednesday

2:51 AM

🌳 Japan’s Biggest Bank Readies For Rate Liftoff This Month; Bitcoin ETFs Saw Record Volumes Amidst Price Retracements

BTC

ETH

S&P Futures 500

$63,563.53

$3,571.52

$5,087.00

(-6.65%)

 (-1.37%)

(-0.91%)

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

  • Japan’s Biggest Bank Readies for Rate Liftoff This Month; US manufacturing gauge drops as industry struggles for momentum (More in Macro & TradFi)
  • Spot BTC ETFs sets new trading volume record; SEC claims that Binance is not fully cooperative (More in DeFi & CeFi)
  • Bitcoin's trading supply tightens as halving nears; LTH distribution impacts price dynamics (More in On-Chain)
  • A strong call skew remains for both BTC and ETH despite the rapid price retracements (More in Crypto Derivatives)
  • BTC and ETH showing signs of bullish divergence with traders losing their buying momentum (More in Crypto Technical Analysis)

Macro & TradFi

Japan’s biggest bank, ​​Mitsubishi UFJ Financial Group Inc., expects an end to negative rates by March, signaling significant implications for both the Yen and Japan's massive government bond market valued at 1,096 trillion yen ($7.3 trillion). The Bank of Japan's expected actions align with statements made by its officials and were influenced by political events and other developments throughout the year. The shift from negative interest rates to a 0.1% interest payment on bank reserves is anticipated to reshape the Japanese government bond market, potentially decreasing demand for government bonds (JGBs) and subsequently raising yields. This divergence in monetary policy, with the BOJ raising rates while other major central banks are expected to lower them, could lead to notable market shifts and adjustments.

Elsewhere, the US manufacturing sector experienced a decline in activity, marked by the Institute for Supply Management's (ISM) manufacturing gauge dropping 1.3 points to 47.8, indicating contraction as it fell below the threshold of 50. This decline underscores a broader struggle for momentum within the industry, characterized by reduced orders, production levels, and employment. Despite a notable increase in new orders seen in January, the sector failed to maintain its momentum, with February's data showing the lowest levels of production and factory employment since July. This setback suggests a challenging phase for the manufacturing industry, which has been in contraction territory since late 2022, despite occasional optimistic signals hinting at potential expansion.

The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite dropped 1.02%, 1.04%, and 1.65% respectively after breaching historic highs. Target closed at $168.5, a 12% increase, after higher holiday-quarter earnings on a smaller-than-expected sales decline and a prediction that annual comparable sales would come in above Wall Street expectations. DaVita Inc increased 7% to close at $134.65 with news of expansion of its international operations in Brazil and Colombia, and its entry into Chile and Ecuador.

CeFi & DeFi

  • Bitcoin ETFs record highest trading volume
  • SEC claims Binance is not fully cooperative
  • DeFi TVL breaks $100B for the first time since May 2022
  • Do Kwon wins the expedition trial
  • Shuffle partners with launchpad Bazaar before airdrop
  • Terraform Labs counters SEC claims

US-listed spot Bitcoin ETFs recorded their highest trading volume to date, surpassing $10B as Bitcoin briefly achieved a new all-time high before experiencing a significant correction. This activity marked a notable increase from the previous record set just last week. Among the ETFs, BlackRock's IBIT emerged as particularly prominent, ranking fourth in trading volume across all ETFs with over $3.8B. This surge in activity contrasts with last week's strong net inflows, suggesting that the latest volume spike might be driven by traders taking profits amid Bitcoin's volatility and its substantial price increase over the past month. 

Moving on, the Securities and Exchange Commission (SEC) has alleged that Binance has not fully complied with its discovery requests, casting doubt on the crypto exchange's claims of having sole custody and control over U.S. customer assets. This dispute arises amidst ongoing litigation where the SEC accuses Binance Holdings and its U.S. subsidiary, BAM Trading, of violating securities laws, particularly concerning the management and access to customer funds. While Binance maintains it has met its obligations under a consent order, the SEC's inquiries aim to determine if global Binance employees can access Binance customer funds, challenging the exchange's assurances of exclusive control over customer assets.

On-Chain

According to Glassnode, as the fourth Bitcoin halving approaches in April 2024, the availability of Bitcoin for trading has significantly tightened, affecting its price dynamics. Notably, the rate at which Bitcoin is being set aside for long-term investment surpasses the new supply by over 200%, indicating a strong preference among investors to hold rather than trade. Furthermore, the introduction of Bitcoin ETFs has heightened institutional demand, drawing in more than $9B in BTC investments. This surge in institutional interest, combined with the reduced rate of new supply, suggests a potential for increased price pressure on Bitcoin.

In another analysis by Glassnode, the study on distribution regimes of long-term Bitcoin holders focuses on two main aspects: the rate of distribution and the duration of this activity. The monthly changes in the supply held by LTHs, with particular attention to the substantial market expansions in mid-2019 and early 2021. During these periods, distribution rates peaked at 319k and 836k BTC per month, respectively. In the current cycle, the distribution rate has reached a maximum of 257k BTC per month, with withdrawals from the GBTC representing about 57% of this movement. This pattern suggests that the recent BTC dip can be attributed to long-term holders and GBTC holders capitalizing on their investments.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC declined to 72.51% while that of ETH stayed relatively constant at 76.42%.
  • The 30-day 25-delta skew (C-P) for BTC rose further to 6.12%, while that of ETH rose to 6.27%.
  • The futures market witnessed $1.18B in liquidations, with longs representing 75.40%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

65.40%

DOGE

dYdX

Bybit

58.21%

DOGE

Binance

Bybit

40.49%

DOGE

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.


BTC ATM Implied Volatility (IV) has undergone a notable decrease in the past 24 hours, coinciding with BTC's recent volatility surge and subsequent retracement from a new all-time high. Currently, the 30-day IV registers at 63.9%, with the 7-day IV at 73.12%. The unexpected decline in IVs amidst heightened volatility suggests traders are adopting a cautious approach, possibly awaiting further clarity on BTC's future direction before adjusting their positions.

The BTC term structure remains in significant backwardation, reflecting market uncertainty. IVs for contracts across different tenors have experienced declines, suggesting a cautious approach among traders amid recent retracements. Conversely, ETH has witnessed an increase in IVs for longer-dated contracts, particularly from the 86-day expiry onwards. This shift may indicate traders transitioning from BTC to ETH in response to the recent price movements.

The BTC 25 Delta skews (C-P) have experienced a notable decline, yet the overall sentiment remains bullish. Currently, the skews are still indicative of a significant call premium, standing at 4.16% for 7-day contracts and 6.12% for 30-day contracts. This suggests that despite recent retracements, investors maintain a positive longer-term outlook for BTC.

Lastly, during the US Trading Session on Tuesday, @Paradigm reported large volatility adjustments for both BTC and ETH following the price movements. Some notable trades include the purchase of 725x 8-Mar-24 $62K BTC put, 350x 29-Mar-24 $50K/28-Jun-24 $70K BTC call calendar, and a 4,500x 27-Dec-24 $3.5K ETH call.

Crypto Technical Analysis

On the 4-hour BTC chart, we observe that the price recently approached the all-time peak of $69K, before experiencing a retracement to the current level of around $63K, a decrease of approximately 8.6%. This downward movement is accompanied by a bearish divergence, as the price chart posts sequentially higher peaks while the Moving Average Convergence Divergence (MACD) indicator registers lower highs, signaling a potential weakening of the upward momentum. The shortening of the last upward price leg compared to the previous one suggests a loss in bullish strength. Looking ahead, the immediate support level is situated at $57.5K, which is about an 8.7% decline from the present price. Should this support give way, a further downside may be anticipated. Conversely, resistance can be found near the recent high at $69K.

Moving on to ETH, there was also a retracement from its recent high near $3.8K to the current price of approximately $3.5K, marking a 7.8% pullback. Similar to BTC, there is a bearish divergence, suggesting that the buying momentum is diminishing as sellers begin to dominate the price action. This is reflected in the ETH price forming a series of lower highs while the MACD indicator mirrors this sentiment, with the histogram showing decreased momentum and the signal line crossover indicating a potential shift from bullish to bearish territory. The immediate support level is established at around $3.3K, indicating a further potential downside of 5.7% from the current price. Vigilance is warranted as breaching this support level could trigger an acceleration in selling pressure. Meanwhile, any recovery attempts must overcome the recent decline's momentum to reassert bullish control.

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