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Our Daily View
What We Are Covering Today
- Risk assets pushed higher ahead of CPI; oil prices rebounded on further reopening in China (more in Macro & TradFi)
- Ex-FTX CEO SBF was arrested in Bahamas after US files charges (more in DeFi & CeFi)
- BTC Binary CDD indicates period of accumulation on the horizon (more in On-Chain)
- Little activity on the options front while more traders slowly take up hedged positions against BTC (more in Crypto Derivatives)
- BTC and ETH bounced off support levels, returning to their respective consolidation zones (more in Crypto Technical Analysis)
Macro & TradFi
TradFi markets eagerly await US Nov CPI data due tonight and Fed’s meeting tomorrow. Stocks rose and bonds dropped amid lackluster US 10-year Treasury auction, which saw weak bids and intensified traders’ concerns about the upcoming 30-year long bond sale. In China, COVID is spreading quickly with anecdotal evidence suggesting a much higher positive rate than official numbers; patients with mild symptoms are still flocking to the hospital despite the change of official guidelines. Despite local pressure on the healthcare system, the Chinese government seems determined to reopen further, as HK media reported that quarantine-free travel between the SAR and mainland could restart as soon as Jan 9, 2023.
On the chip-war front, Japan and Netherlands are likely to hop on new US restrictions on chip-making machinery export to China. Lastly, M&A deals are picking up, with Amgen bidding Horizon for ~$26bn leading deal volume to top $70bn this week alone.
Three US indices rallied into the uncertainty of CPI tonight; NASDAQ added 1.25%, S&P 1.41% and DOW 1.49%. Treasury bond yields rose 4-5bps across the curve. Oil rallied for the 2nd day straight, with the US benchmark adding 2.5%.
DeFi & CeFi
- SBF arrested in the Bahamas to testify at congress hearing
- Tron’s stablecoin USDD loses peg and falls to lowest level since June
- Sushiswap lost $30m on LP incentives this year
- Binance launches Ape NFT staking program
- Binance net outflow raises, hitting $902 million in the past 24 hours
- Oasys’ SEGA and Ubisoft-validated gaming blockchain launches
Concern about CEX continues to spread due to the FTX saga as Binance users rushed to withdraw their crypto on the exchange. In the past 24 hours, net withdrawals on Binance hit $902 million as big players like Jump Trading have been withdrawing their crypto assets worth $146 million worth of BUSD, USDT and ETH for the past week. Wintermute, which is another significant crypto market marker, withdrew $13 million worth of wBTC and USDC.
Elsewhere, Tron’s stablecoin USDD lost its peg earlier in the day, falling below $0.97, its lowest level since 22 June. This comes as the USDD/3CRV pool on Curve continues to be extremely imbalanced, with USDD accounting for 86% of the pool’s total liquidity as more traders are swapping USDD for the other stablecoins in the pool, causing it to remain imbalanced for extended periods of time. Tron Founder Justin Sun announced that he was deploying more capital and USDD has since recovered slightly, albeit still below peg.
Looking at on-chain, the BTC Binary CDD (21d) indicates that an accumulation phase might be starting again. Binary CDD is a metric that considers whether the volume of coin days destroyed over the period of interest was more or less than the long-term historical average. There has been a spending slow-down since 24 Nov, which might indicate seller exhaustion, which has historically led to periods of accumulation thereafter. (@barovirtual)
- Funding rate for BTC has turned negative while ETH has remained flat
- 7 day ATM IV flat for BTC and ETH
- 30 day 25 delta put skew show little change for BTC and ETH
Future liquidations on Monday amounted to $45M, of which 63% were long liquidations.
BTC term structure remains in contango, while the tail-end expiries have changed from backwardation to contango. ETH’s term structure is in contango as well with IV trading higher than last week for expiries from 30 Dec onwards. The largest change in open interest for calls include far-dated contracts such as the 30 Jun 25K calls and 31 Mar 25K, while for puts the largest OI change was 30 Dec 16K.
On the flows side, the most popular trading strategy has been bear put spreads and bull put spreads. The most traded instrument by volume has been 31 Mar 36K calls.
Crypto Technical Analysis
Finally, onto TA. BTC closed 0.69% higher to $17.2K at the end of the US session. Keeping above $17.1K, the price is back in the $17.1K-$17.5K resistance zone. On the H4, price bounced off the 100 EMA while RSI broke above the neutral level but maintain its bearish structure. For now, BTC will need to break above the resistance zone of $17.1K-$17.5K before we can see another leg up.
ETH has followed a similar trajectory to BTC, trading lower before rising above $1.27K. Currently, ETH has broken through the $1.22K-$1.23K support zone and is now testing resistance at $1.26K-$1.28K.
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