🌳Mike Johnson Gives Compromise Plan To Avoid Government Shutdown; Fake BlackRock XRP Fund Filing Triggers Brief Crypto Market Rally

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• Looming government shutdown on November 17; Biden and Xi set to meet in San Francisco on Wednesday (More in Macro & TradFi)
• Fake BlackRock XRP fund filing triggered brief rally; Create2 wallet exploit leads to $60M stolen in 6 months (More in DeFi & CeFi)
• Yearn Finance surges in Whale transaction activity; Bitcoin halving to increase scarcity (More in On-Chain)
• BTC's 7-day IV dips; term structure holds contango; event scarcity reduces volatility (More in Crypto Derivatives)
• BTC retraces back to the rising channel while ETH displays a double top pattern, signaling more potential downside (More in Crypto Technical Analysis)

Macro & TradFi

The US is dominated today by the looming risk of a government shutdown, with Speaker Mike Johnson's compromise plan facing critical challenges. This plan, essential for avoiding a shutdown after November 17, omits key conservative priorities such as spending cuts and migration control, triggering opposition from GOP conservatives and skepticism from the White House, particularly due to the absence of Ukraine aid. The potential shutdown poses significant economic threats, including the risk of a credit rating downgrade by Moody's and substantial political fallout for both parties. Financial markets, for now, seem to be overlooking the shutdown threat, focusing instead on broader issues like interest rates and global conflicts. However, the impending government shutdown and its broader economic implications remain a critical concern, highlighting the deep-seated political divisions and their impact on the nation's economic stability.

Moving on, US President Joe Biden and Chinese President Xi Jinping are set to engage in critical discussions in San Francisco this Wednesday, marking a concerted effort to address escalating tensions, particularly concerning Taiwan. This meeting, a follow-up to their first encounter at last year's G20 summit, aims to curb the steep decline in US-China relations, which have been further strained by incidents such as the suspected Chinese spy balloon over the US. However, the summit is not expected to yield major agreements, with both sides maintaining a focus on managing competition and preventing conflict escalation, especially in light of the upcoming 2024 elections in both Taiwan and the US. Discussions will span various contentious issues, including military activities in the South China Sea, technology export controls, and potentially reopening military communication channels.

Equities were muted in the last trading session, as the S&P 500 and Nasdaq Composite fell 0.084% and 0.22% respectively, while the DJIA rose 0.16%. In Europe, stocks rose with the Stoxx600 rising 0.75%. Health firms were among the strongest performers, including the dialysis company Davita Inc rising 6.5% and Insulet rallying 5.6%. Market participants will be anticipating the US CPI data release later tonight at 21:30 SGT.

DeFi & CeFi

• Fake BlackRock XRP fund filing triggered brief rally
• Create2 wallet exploit leads to $60M stolen in 6 months
• Ex-Polygon veteran Wyatt joins Optimism Foundation unit in growth role
• Former FTX, Alameda executives to start new crypto exchange
• $27M $USDT stolen from wallet linked to Binance deployer
• $GROK inspired by Elon Musk’s Grok AI hits $160 market capitalization
• Grayscale’s Solana trust trades at 869% premium
• Genesis, 3AC reach agreement on $1B of claims

Following the rumor of BlackRock’s filings for the XRP exchange-traded fund (ETF), Blackrock has denied the attempt for such a launch, clarifying that a regulatory filing indicating such a move is fake. While XRP's price briefly surged over 10% in response to the news, it quickly retreated. BlackRock had previously filed with the SEC for spot Bitcoin and Ether ETFs, using a Delaware entity for the corporate structure. The latest filing mimicked those forms but was not submitted by BlackRock. Speculators and media outlets further circulated and affirmed the news, which fueled buying pressure and perpetuated the fraudulent development.

In other news, hackers are reportedly using a code called Create2 to bypass security alerts. ScamSniffer and SlowMist estimate that around 99,000 victims have lost $60M to this technique in the last six months. Create2, utilized by platforms like Uniswap, helps predict the address of a contract before deployment on the Ethereum network. By exploiting Create2, attackers can quickly create temporary wallet addresses, avoiding security alerts when users click on malicious signatures. Victims are prompted to "approve" a signature, unknowingly granting access to their wallets. Users are advised to carefully check website domains before confirming transactions or signing.

On-Chain

In an analysis by Santiment, Yearn Finance has witnessed a significant 60% increase in market capitalization over the past week, a growth trajectory underpinned by a surge in both address growth and whale transaction activity. Notably, whale engagement has reached its highest point in 15 months, signaling robust institutional or high-net-worth individual confidence in YFI. Concurrently, the creation of new YFI addresses has escalated exponentially, indicative of expanding retail interest. This dual influx of whale and new user activity is pivotal, as it suggests a heightened market confidence in YFI.

Elsewhere, in Glassnode’s analysis of current Bitcoin market dynamics, a crucial metric is the comparison between the rate of Bitcoin accumulation and its new issuance. Currently, around 81K BTC are mined each quarter. However, this figure is poised to halve to approximately 40.5K BTC per quarter following the upcoming Bitcoin halving event. This imminent reduction in new Bitcoin supply, as highlighted in Glassnode's analysis, is significant. Concurrently, Glassnode's 'stored supply' data, taking into account the duration of investor holdings, reveals a pattern of accumulation in three distinct waves: the first wave occurs mid-bear market following a sharp price correction from the all-time high, the second wave appears later in the bear market as the cycle's lowest prices are set, and the third wave emerges leading up to and during the halving event, as investors position themselves in anticipation of the change. This suggests a potential increase in scarcity and value for Bitcoin, possibly driving up its price and underscoring the importance of the halving event in influencing Bitcoin's market dynamics.

Crypto Derivatives

• Funding rates remained positive for BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH fell to 56.03% and 61.91%, respectively.
• The 30-day 25-delta skew (C-P) for BTC fell to 4.67% and 30-day 25-delta skew (C-P) ETH fell to 4.32%.
• The futures market witnessed $197.20M liquidations in the last 24 hours, with longs representing 74.07% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

BTC 7-day implied volatility has decreased from 52.91% to 49.01%, signaling a reduction in short-term market volatility, while the 30-day implied volatility has also decreased from 54.29% to 52.82%, suggesting a steadier outlook for the month ahead.

Meanwhile, BTC's term structure has maintained a contango state with IV falling across all tenors. Notably, near-term expiries up to 45 days witnessed the largest drop in IV, possibly caused by the lack of upcoming BTC-related events during this period.

Over the weekend, BTC’s 25-delta 7-day skew notably decreased from 8.11% to 4.80%, suggesting a reduction in short-term bullish sentiment, while its 30-day skew dropped slightly from 8.80% to 5.42%, indicating that options traders are increasingly hedging their long exposures. This implies a cautious market attitude towards BTC.

Lastly, @Paradigm reports BTC options sentiment is mixed: an 800K position on Dec 1, 2023, 37K straddles was sold, indicating a hedging strategy. A bullish tendency is shown by the purchase of a 400K position in Nov 17, 2023, 37.5K/Nov 24, 2023, 39K call calendars. For ETH, Paradigm reveals cautious optimism with the purchase of a 15.53K position in Nov 24, 2023, 2.1K/2K put spreads, along with outright bullishness reflected by a 15K purchase in Dec 1, 2023, 2.15K straddles.

Crypto Technical Analysis

Turning to technical analysis, BTC struggled to sustain its position above the upper boundary of the channel and has retreated back within the range as of this morning. The RSI has also seen a significant decrease, currently resting at 39.67, steadily approaching the oversold zone. If the price continues oscillating within this rising channel, BTC is likely to test the lower boundary at approximately $35.2K, representing a near 4% potential downside. Conversely, there's a possibility that BTC may make another attempt to break above the channel's upper boundary at $36.8K, aiming for an upside move toward the daily resistance level at $41.1K.

ETH, on the other hand, is indicating a slightly more bearish tone, having tested the $2.12K resistance for the second time and subsequently failing to retrace to a similar level. Consequently, ETH is currently exhibiting a double-top pattern, potentially signaling further downside from the current level. In such an event, ETH is likely to move towards the $1.93K level, representing a long-term resistance-turned-support zone. However, there remains the possibility for ETH to make a third attempt to test the $2.12K resistance as it strives to break further to the upside.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• US Shutdown Risk Lingers Despite Speaker’s Compromise Plan

• China’s Credit Growth Still Weak in October With Low Loan Demand

• Xi and Biden to try to ease tensions as Taiwan looms over US-China talks

• Gang says ICBC paid ransom over hack that disrupted US Treasury market

• Israel says it raised $8 billion of debt since start of war with Hamas

• Walmart, Target earnings to offer clues on crucial holiday season

• NY Fed finds softer inflation expectations in October

• US manufacturing has plateaued after post-pandemic rebound

• US rate cut not seen until Q4 2024 due to strong GDP growth -Goldman economists

• US budget gap narrows in October due to delayed tax payments

• Citadel Securities explores China licence as Beijing steps up market-making program

• APEC's growth to slow as persistent inflation, US-China tensions weigh-report

• Nvidia unveils H200, its newest high-end chip for training AI models.

Crypto

• Bogus BlackRock XRP Filing Spoofs ETF Watchers, Crypto Traders.

• Ex-Polygon Veteran Wyatt Joins Optimism Foundation Unit in Growth Role.

• Former FTX, Alameda Executives to Start New Crypto Exchange: WSJ.

• FTX Sues Bybit to Claw Back $953M in 'Misappropriated Funds'.

• Ethereum Wallet Drainer Steals $60M in Six Months.

• Hacker Steals $27M in Tether From Wallet Linked to Binance Deployer.

• GROK Token, Inspired by Elon Musk’s Grok AI, Hits $160M Capitalization in Latest Frenzy.

• Grayscale's Solana Trust Trades at 869% Premium as Institutions Flock to SOL.

• Bitget's Hong Kong Unit Halts Operations, Won't Apply for Crypto License.

• Genesis, Three Arrows Capital Reach Agreement on $1B of Claims.

• Crypto Exchange Bithumb Plans South Korea IPO in Second-Half 2025: Report.

Deal Flow

• Crypto News Site The Block Bought by Foresight Ventures in $70M Deal.

• Cboe is launching margined bitcoin and ether futures in January

• Terraform Labs acquires cross-chain data provider as it pursues post-Kwon plans

• Tokenized Cash Fintech Fnality Raises $95M Led by Goldman and BNP Paribas.

Yours sincerely,
Treehouse Research 🌳