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
- Rising U.S. jobless claims, ongoing inflation, geopolitical tensions and debt-ceiling negotiations add to market uncertainties (more in Macro & TradFi)
- Sandeep Nailwal hints at a potential airdrop for Polygon zkEVM; Uniswap community discusses the possibilities of turning on fee switch (more in DeFi & CeFi)
- ETH burn rate on track to reach proposed hard cap supply by Vitalik Buterin in 2018; BTC median transaction volume hit 5-year lows (more in On-Chain)
- BTC skew flips to put premium; Bets on vega online with straddles on BTC and ETH (more in Crypto Derivatives)
- BTC faces critical decision period as potential weakness looms in chart analysis (more in Crypto Technical Analysis)
Macro & TradFi
Two critical macroeconomic data points were released yesterday that gave opposite sentiments around the current state of the US economy. U.S. Initial Jobless Claims rose to 264,000 from 242,000, marking the highest level since October 2021, showing an unexpected surge in layoffs as the economy grapples with inflation and supply chain disruptions. This uptick could indicate a slowdown in the labor market recovery. However, the U.S. Producer Price Index rose 3.2% YoY in April, lower than the 3.4% increase in March, providing some relief regarding inflationary pressures, but it still points to the ongoing price pressures facing producers.
On the political front, the much-anticipated meeting between President Biden and Republican House Speaker Kevin McCarthy on the issue of the U.S. debt-ceiling was postponed to next week. This delay prolongs the uncertainty around the U.S. government's borrowing limit. If an agreement to raise or suspend the debt ceiling is not reached in time, it could lead to a U.S. default on its debt, which would have severe economic repercussions. As such, the outcome of this meeting will be closely watched by investors and financial markets.
In an attempt to stabilize the increasingly strained US-China relations, US National Security Adviser Jake Sullivan recently held talks with China’s top diplomat Wang Yi in Vienna. This meeting marks a significant diplomatic effort since relations between the two countries have reached their lowest point since 1979. Over the course of two days, Sullivan and Wang engaged in "candid, substantive, and constructive" discussions, covering a wide range of issues including the US-China relationship, global security matters, Russia's war against Ukraine, and Taiwan.
Onto the market’s reactions, there has been a mixed performance in major U.S. equity indices. The S&P 500 (SPX) and Dow Jones Industrial Average (DJIA) fell by 0.17% and 0.66% respectively, indicating a mood of caution among investors. However, the NASDAQ Composite Index (COMP), heavily weighted towards tech stocks, bucked the trend with a modest rise of 0.18%.
DeFi & CeFi
- OmniBOLT announces plans to support BRC20 tokens on the Lightning Network
- Gate.io and Huobi listing memecoin $LADYS after Elon Musk tweet
- Polygon co-founder Sandeep Nailwal hints possible airdrop for Polygon zkEVM
- New York State introduces bill allowing stablecoins for bail payments
- Uniswap is considering turning on the fee switch
A tweet by @mrjasonchoii emerged criticizing the TVL underperformance of the newly launched Polygon zkEVM chain compared to other zkEVM chains. Polygon co-founder Sandeep Nailwal replied that TVL can be an inflated metric due to airdrop anticipations in the market. He also stated that the Polygon zkEVM is still in its early stages and previously successful L2s such as Arbitrum took more than a year to fully blossom. Despite the fact that 92% of $MATIC tokens are already in circulation, which led the market to believe that there will be no airdrop for the new Polygon zkEVM chain, Sandeep’s response implies a potential airdrop to the chain by saying “Plus there is no rule that an existing token can't do a massive airdrop 😉.”
On the other hand, a Uniswap governance proposal was created by GFXLabs that proposes Uniswap turn on the fee switch and start charging a protocol fee equal to 20% of the pool fees across all Uniswap V2 and V3 pools to boost treasury positions and provide rewards to $UNI token holders. The Uniswap community has previously discussed this matter, but the proposal failed due to concerns about potential tax implications for the protocol and its users. Meanwhile, discussions around the current proposal are ongoing, and details around many aspects, such as the collection mechanism, allocations, and token usage, have yet to be ironed out.
For on-chain analytics, since the rise of the memecoin frenzy sparked by the advent of $PEPE coin, ETH burn rate has been skyrocketing which rapidly deflates its supply. At one point, ETH burn rate reached its highest level in a year, with 14.6K ETH burnt from elevated gas fees. If the rate continues, it is anticipated that the current ETH supply will eventually drop below the proposed hard cap of 120,204,432 originally suggested by Vitalik Buterin in 2018.
Elsewhere, the 7d MA of BTC mean exchange outflow volume has surged to a one-month high of 0.42 BTC. This increase in outflow can be attributed to the growing prevalence of BRC-20 transactions, which involve transferring BTC out of exchanges for such purposes. The median transaction volume (7d MA) has also been steadily decreasing and has now hit a five-year low of $85.57. This decline further supports the notion that recent network transactions primarily involve low payload activities associated with BRC-20 transactions (@glassnode).
- BTC and ETH funding rates remain positive
- 30-day ATM IV rose to 47.21% and 48.43% for BTC and ETH respectively
- 30-day 25-delta skew trends towards put premium for both BTC and ETH at -1.68% and -3.91% 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
The futures market saw $95.11M in liquidation over the past 24 hours with the majority coming from longs at $77.02M.
BTC term structure remains relatively unchanged while IV fell across the curve for ETH. BTC 30-day skew flips towards put premium and currently sits at -1.68%, ETH skew also tells a similar story with its put skew tightening to 3.91%. The RV increased to 45.53% and 50.54% for BTC and ETH respectively. Variance risk premium also turns negative as a result with BTC at -0.12% and ETH at -2.93%.
On the flow side, majority of BTC volume came from the June end-of-month calls. Looking at the open interest for the end-of-week BTC contract, it appears that bears are likely to come out ahead as the BTC price has dipped heavily for the past two days. Meanwhile, bulls are likely in for pain as the majority of calls are concentrated at $30K and $31K strike prices, which were placed when BTC tested the $31K resistance in mid-April.
If BTC price remains around $27K, the bears would profit around $230M over the bulls with approximately 6.1K put contracts ITM. The max pain would be if the contract expires with BTC at $28K.
A noteworthy trade is the writing of a 1K BTC contract for the 30 June $32K/35K 1x2 call spread. It also seems that with the relatively cheap IV, traders are taking bets on vega with 215 BTC contracts for the 19 May $27.5K straddle and 2125 ETH contracts for the 30 June $1.8K straddle (@tradeparadigm).
Lastly, VIX remained stagnant at 16.93.
Crypto Technical Analysis
Recapping on the 4-hour BTC chart, there has been a period of consolidation between $26.6k and $29.9k. Traders are watching for a potential breakdown of the Head & Shoulders pattern at the $27k level. Although price is currently below the $27k neckline, the support area between $26.6k and $27.1k has shown resilience, and a rebound above the neckline is still possible. The market is in a critical phase, as a move below $26.6k would indicate bearish implications, leading to a potential decline toward the next support level at $25k.
For ETH, there has been a retracement back to the lower consolidation range between $1.73k and $1.8k. This support zone has lower trading volumes, which can contribute to volatile swings within this range. The $1.73k level holds significant support based on higher time frames, where ETH previously broke out from a multi-month consolidation phase. This level presents an attractive opportunity to consider adding long positions, given its historical strength and the potential for an upward rebound.
Access institutional-grade commentary on TradFi × Crypto markets
By Treehouse Research
Treehouse Research 🌳