🌳Microsoft Hires Sam Altman And Greg Brockman To Lead A New AI Research Team; Kraken Fell Victim To The SEC In A New Unregistered Broker Dealer Lawsuit

21 Nov 2023, Tuesday

2:32 AM

🌳Microsoft Hires Sam Altman And Greg Brockman To Lead A New AI Research Team; Kraken Fell Victim To The SEC In A New Unregistered Broker Dealer Lawsuit

BTC

ETH

S&P Futures 500

$37,424.25

$2,024.50

$4,564.75

(+0.32%)

 (+0.90%)

(+0.90%)

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

  • Microsoft hires Altman and Brockman; Barclays set to reach another record profit year in Japan (More in Macro & TradFi))
  • Kraken accused by SEC of operating unregistered platform, mixing customer funds; US DOJ in talks to end Binance criminal case for $4B (More in DeFi & CeFi)
  • Ethereum sees active addresses spike; Indexed Finance suffers governance attack (More in On-Chain)
  • Large increase in C-P skew was observed with Paradigm registering mixed flows during yesterday’s trading session (More in Crypto Derivatives)
  • Bitcoin aiming for $40K amid ascending wedge pattern; Ethereum tests key trend lines with bearish signals looming (More in Crypto Technical Analysis)

Macro & TradFi

Microsoft has made a strategic decision to hire Sam Altman and Greg Brockman, the recently ousted co-founders of OpenAI, to lead a new advanced AI research team. This development, announced by Microsoft CEO Satya Nadella, comes in the wake of a dramatic weekend where Altman was abruptly dismissed from OpenAI, with Brockman resigning shortly thereafter. While their reintegration into OpenAI fell through, their transition to Microsoft marks a significant realignment in the AI research landscape. Despite this high-profile recruitment, Microsoft reaffirms its commitment to its ongoing partnership with OpenAI, underscoring its confidence in continuing to drive innovation and maintain its product roadmap. This move highlights the evolving dynamics in the AI sector, particularly regarding talent acquisition and the interplay between major industry players like Microsoft and pioneering AI entities like OpenAI.

Moving on, Barclays Plc is on track to achieve another year of record profits in Japan, buoyed by the resurgence of the country's debt and rates market trading. This positive trend for the UK-based banking group is largely attributed to the Bank of Japan's recent policy changes, which have revitalized the nation’s bond market, sparking increased trading activity and competition among financial firms. The dynamic shift in the Japanese financial landscape, marked by a departure from the previously quiet trading floors, reflects broader changes in global financial markets, with Barclays poised to potentially expand its workforce in response to the burgeoning demand.

Equities surged in the last trade session as the NASDAQ, DJIA, and S&P 500 increased 1.13%, 0.58%, and 0.74% respectively. Microsoft was close in focus, as shares in Microsoft rose following the announcement that OpenAI chief Sam Altman would join the company to lead the new AI research team. In Japan, the Nikkei 225 closed down 0.59% while Hang Seng rose 1.86% which took place with China’s commitment to stimulate its economy.

DeFi & CeFi

  • Kraken accused by SEC of operating unregistered platform, mixing customer funds
  • US DOJ in talks to end Binance criminal case for $4B
  • Celsius revamp plan hits speed bump with SEC
  • Tether freezes $225M linked to human trafficking syndicate amid DOJ investigation
  • Crypto exchange Bullish acquires CoinDesk
  • Osaka Digital Exchange to start security token trading platform
  • Blockchain Association files support in suit to lift Tornado Cash sanctions
  • Bittrex Global announces all trading disables as it winds down operations
  • SEC punts decision on Franklin Templeton and Global X spot ETFs

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against cryptocurrency exchange Kraken, alleging it violated federal securities laws by operating as an unregistered broker, dealer, and clearing agency. The lawsuit claims that Kraken commingled customer funds, amounting to $33B, with its corporate assets. Additionally, the SEC stated that Kraken at times mixed over $5B of customers' cash with its own. The regulator also listed several tokens, including ALGO, MATIC, and NEAR, as unregistered securities that Kraken promoted to the public. The SEC seeks to ban and fine Kraken, demanding the return of any ill-gotten gains. Kraken disputes the allegations and advocates for clear regulatory guidelines.

Binance Holding Ltd. is reportedly in negotiations with the U.S. Department of Justice (DOJ) to resolve accusations of multiple criminal violations, including money laundering, bank fraud, and violating U.S. sanctions laws. A $4B fine is on the table for Binance, and the company's founder, Changpeng "CZ" Zhao, might also face U.S. criminal charges. Discussions could conclude in the coming weeks, though both Binance and the DOJ declined to comment. This fine would represent one of the largest settlements in crypto history, but details regarding additional conditions or business requirements are uncertain.

On-Chain

According to analysis on @Santiment, Ethereum is experiencing a significant uptick in address activity, marking the second highest daily activity level since mid-September. Notably, this surge in activity is not paralleled by an increase in the movement of coins to exchanges, a divergence from the pattern observed during the peak on November 9, suggesting a potentially bullish sentiment as the elevated network engagement is not translating into a heightened exchange inflow, which can often precede selling pressure. The current low of just 8.24% of Ethereum's total supply on exchanges further underscores the scarcity of available ETH for trading on CEXes, possibly indicating accumulation among investors and use for DeFi applications.

In other news, according to on-chain detective ZachXBT, a hostile governance attack is currently underway against Indexed Finance, targeting its treasury which comprises $36K in DAI and approximately $48K in NDX, accounting for potential slippage. The principle at stake is the integrity of governance mechanisms, particularly the prohibition against profiting from inactive projects through governance exploitation. Further complicating the matter is the attacker's alleged connection to Alex Chon, a purported North Korean IT worker previously dismissed from two positions due to dubious conduct. Notably, Chon has a history of altering his Github handle, presently operating under the alias 'Holy Pengy' and sporting a Pudgy Penguins profile picture. This individual is also linked to a similar governance attack attempt on Relevant (via the handle 0x9b9), a pattern of exploiting governance vulnerabilities across platforms. ZachXBT recommends stakeholders with NDX holdings that are self-delegated or controlled via associated wallets to cast a dissenting vote against this raid.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH rose slightly to 58.21% and 57.14%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH rose to 7.30% and 5.07%, respectively.
  • The futures market witnessed $112.14M liquidations since Friday, with longs representing 58.11% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

46.33%

DOGE

OKX

dYdX

25.12%

ETH

Binance

dYdX

16.96%

SOL

Binance

dYdX

Source: @CexyArbBot Telegram Bot

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.

In the last 24 hours, both BTC's 7-day and 30-day implied volatilities have remained relatively unchanged, further solidifying the market's expectation of stability in BTC's short-term future.

Meanwhile, BTC's term structure has continued to be in contango. However, medium-dated contracts, starting from a 10-day expiry onwards, have witnessed a slight increase in IVs for up to 3%. This suggests that the market is factoring in higher BTC volatility as we approach the end of the year, possibly in response to the anticipated outcomes of various ETFs due in January.

The 25-delta call-put skew has experienced another significant increase in the last 24 hours. The 7-day skew rose from 5.43% to 7.70%, nearing the range of highs observed in the last 30 days, indicating a growing bullish sentiment. Similarly, the 30-day skew also increased to 7.30%, possibly reflecting the market pricing of potential price upsides as we anticipate the January ETF news to arrive by the end of December.

Lastly, data from @Paradigm suggests that mixed flows were observed in yesterday's APAC/Europe trading session. On the BTC side, a large call calendar was bought, involving a 2,000x 29-Dec-23 37,000 / 26 Jan 2024 39,000. On the ETH side, notable trades include the outright purchase of 5,000x 26-Jan-24 4400 Call and 2,000x 24-Nov-23 1800 put.

Crypto Technical Analysis

Transitioning to technical analysis, BTC’s market outlook remains bullish on the 4-hour chart, maintaining a clear upward trend with its current trading price around $37.45K. BTC sits within the confines of a bullish ascending wedge pattern, with potential for a 4-5% price increase toward the $38K to $40K resistance zone, if the pattern is sustained. The RSI has seen a slight decrease to 59.68% from 61.45%, suggesting a small drop in buying momentum while overall bullish sentiment prevails. However, a wane in momentum within the wedge pattern, leading to a breach below the 50 SMA, could foreshadow the onset of bearish pressure. Such a breakdown may trigger a reversal to retest the $36K support level, in alignment with the trend line, echoing yesterday's analysis. Importantly, while Bitcoin currently holds above the 50 SMA, the convergence between the 50 SMA and 100 SMA could be foretelling emerging bearish momentum. If this bearish trend continues, there's a possibility that we might see BTC approach the lower support levels of $30K to $31K.

On the other hand, the ETH 4-hourly chart exhibits a more volatile pattern. Currently trading above the 50MA at $2K, there's a bullish case if ETH breaks past the upper orange and blue trend lines, potentially leading to a 6-7% increase towards the $2.12K to $2.16K resistance range. The RSI, however, has receded to 59.69 from yesterday's high of 63.34, and the presence of a bearish doji candlestick signals caution. Additionally, the convergence of the 50 SMA and 100 SMA could be pivotal; if these moving averages cross, it may suggest a shift in momentum. Should this result in a bearish downturn, ETH might retract by 8-9%, seeking support at the $1.84K to $1.86K level, a significant drop from its current position.

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