🌳 The U.S. Revokes Chip Licenses For Supply To Huawei; FTX To Repay Creditors In Full With Additional Compensation

08 May 2024, Wednesday

2:44 AM

🌳 The U.S. Revokes Chip Licenses For Supply To Huawei; FTX To Repay Creditors In Full With Additional Compensation

BTC

ETH

S&P Futures 500

$62,582.70

$3,019.68

$5,214.25

(-1.41%)

 (-1.61%)

(+0.17%)

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

  • U.S. revokes licensing to supply chips to Huawei; Trump’s criminal trial indefinitely postponed (More in Macro & TradFi)
  • FTX to repay their creditors in full and receive additional billions worth of compensation; Grayscale withdraw its Ethereum Futures ETF application (More in DeFi & CeFi)
  • Increasing divergence in performance between Bitcoin and Ethereum; Machi Big Brother accumulated $5.05M worth of $FRIENDS (More in On-Chain)
  • BTC volatility declines; market stability mirrors Federal Reserve interest rate policy (More in Crypto Derivatives (More in Crypto Derivatives)
  • BTC forms a potential head and shoulders pattern while ETH approaches the lower boundary of the previously identified channel (More in Crypto Technical Analysis)

Macro & TradFi

The Biden administration has intensified its tech restrictions against China by revoking export licenses that allowed Intel and Qualcomm to supply Huawei with semiconductors. This marked a significant escalation in the U.S. strategy to limit the Chinese telecom giant's access to advanced technology amid ongoing national security concerns. This move is part of the broader efforts to control exports to Huawei and aligns with continued pressure from U.S. lawmakers advocating for stricter measures against the company. Huawei is accused of facilitating cyber espionage for Beijing, allegations the company denies.

Meanwhile, U.S. District Judge Aileen Cannon has indefinitely postponed the criminal trial of former President Donald Trump regarding the retention of classified documents after his presidency. Originally scheduled to commence on May 20, the trial has been delayed due to unresolved pretrial issues, including the management of classified information. This delay casts uncertainty on whether Trump will stand trial before the November 5 election. His legal team has advocated to postpone the trial until after the election, citing the need for adequate preparation and fair proceedings. 

On Tuesday, U.S. stocks saw slight gains with the Dow Jones increasing by 0.08% and the S&P 500 by 0.13%, marking a continued positive streak for both indices. However, the Nasdaq fell slightly by 0.10%, breaking its previous upward trend. Despite the general market upswing, Disney shares dropped drastically by 9.5% due to disappointing performances in its TV and cinema sectors, overshadowing a profit in its streaming services. Similarly, Tesla's stock declined by 3.8% after a significant drop in its Chinese vehicle sales. On the other hand, Apple saw a modest increase of 0.4% after announcing a new chip for its iPad Pro, even as Nvidia's shares fell by 1.7% amid news that Apple is entering the AI chip market. Palantir shares also tumbled by 15.1% after it revised its revenue expectations downward.

CeFi & DeFi

  • FTX to repay their creditors in full and receive additional billions worth of compensation
  • Grayscale withdrew its Ethereum Futures ETF application
  • Susquehanna International Group adds $1B in Bitcoin ETFs to portfolio
  • Ethena's ENA Jumps 8% as Bybit Endorses USDe Token as Collateral for Derivatives Trading
  • SEC pushes back against Terraform’s claims fraud happened outside the US
  • New South Korean leadership will press for Bitcoin ETF trading

In its Chapter 11 bankruptcy plan, FTX proposes to return at least 118% of allowed claims to 98% of its creditors. The remaining creditors will receive full repayment of their claims along with additional compensation to account for the time value of their investments. FTX estimated the total value of property collected to be between $14.5B and $16.3B. The proposed 118% recovery is contingent upon bankruptcy court approval and is specifically designed to benefit creditors with allowed claims below $50K. The timeline for this proposed repayment is to be executed within 60 days after the plan's effective date. Although FTX confirmed that they would not be restarting the cryptocurrency exchange as stated in their restructuring plans, this reimbursement to make creditors whole provides the wider digital asset industry some confidence with regulations being enforced on bad actors. We could see an outflow or distribution of capital across networks as this locked liquidity gets returned to the creditors in the sum of billions.

In other news, Grayscale made an unexpected move to withdraw its Form 19b-4 application seeking approval for a spot Ether (ETH) exchange-traded fund (ETF) on May 7. This withdrawal came just three weeks before the Securities and Exchange Commission (SEC) was scheduled to issue a decision on the application. The withdrawal led to some confusion among analysts as the SEC is bound to decide on at least one spot Ether ETF application in the near term on May 23. The current timelines to look out for are SEC’s decision on the applications for VanEck’s on May 23, ARK 21Shares’ on May 24, and Hashdex’s on May 30. Despite this withdrawal, industry analysts anticipate a coordinated decision from the SEC on the remaining applications for spot Ether ETFs. This aligns with the SEC's approach in January, where it issued rulings on all or most applications for spot Bitcoin ETFs concurrently.

On-Chain

An analysis by Glassnode has reported an increasing performance gap between Bitcoin and Ethereum during the cycle from 2023 to 2024. This is reflected by comparing the Net Unrealized Profit/Loss (NUPL) metric which displays the profitability of BTC and ETH investors relative to the average on-chain cost basis for the respective assets. With BTC entering the bull phase and NUPL exceeding 50% of the asset market cap value 3 months earlier than Ethereum. Furthermore, the realized cap associated with short-term BTC holders seems to have reached its peak near the recently established all-time high, while ETH has exhibited minimal upward movement. This indicates weaker capital rotation within the ETH chain compared to BTC. However, it also suggests that the digital asset market still has long-term potential.

Elsewhere, Lookonchain did an analysis that revealed that Machi Big Brother purchased 661 ETH or $2.05M worth of $FRIEND tokens at $2.57. In total, he has bought 2.19M $FRIENDS tokens worth $5.05M at a cost price of $2.31. This strategy suggests that Machi Big Brother is employing a Time-Weighted Average Price (TWAP) method to accumulate the token, likely in anticipation of its future appreciation. Investors and traders should adopt a cautious approach if they have exposure or are planning to have exposure to this token as whales hold a larger percentage of the tokens, and thus possess significantly more pricing power.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH tumbled lower to 53.57% and 64.30%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC decreased to 0.75% while that of ETH increased to -2.19%.
  • The futures market witnessed $167.4M in liquidations, with longs representing 77.51% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

14.84%

AVAX

OKX

dYdX

10.30%

BTC

OKX

Bybit

9.98%

AVAX

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.


Today’s BTC ATM IVs show a visible decline in the 7-day IV, indicating lowered expectations for short-term volatility. This decline corresponds with a stabilization in longer maturities, reflecting a calmer market sentiment possibly influenced by Federal Reserve Official Neel Kashkari's announcement of maintaining current interest rates for an extended period, which enhanced market predictability.

The BTC Shadow Term Structure maintains a contango shape, indicating that market participants expect future volatility to exceed current levels. Concurrently, mark IV has decreased across the entire curve, reinforcing the analysis that sentiment regarding BTC price is becoming more settled.

The BTC 7-day and 30-day call-put skews remain stable, both hovering around the 0% mark, with the 7-day skew currently at -0.13%. This stability suggests that option investors are uncertain about BTC's price direction over the next month, aligning with expectations that the Federal Reserve will maintain high interest rates, leading to anticipated minimal volatility.

Lastly, @Paradigm highlighted significant option activity this week, with a strong focus on structured positions and call strategies. Notable BTC trades included the purchase of 165x 28-Jun-24 80/90K Call Spreads, demonstrating optimism for higher BTC prices. In a more complex transaction, there was also an acquisition of a custom structure involving 150x 17-May-24 65/72K Calls, adjusted by selling 10x 10-May-24 65K Calls and 20x 24-May-24 72K Calls.

Crypto Technical Analysis

In Technical Analysis, BTC has edged slightly downwards in the last 24 hours. A head and shoulders pattern appears to be forming, potentially signaling a reversal to the downside for BTC. If this pattern materializes, the $60K level serves as the immediate support range, suggesting a potential downside of around 5% from this level. Conversely, if bullish momentum returns, $67K remains the next notable resistance for traders to monitor.

On the other hand, ETH has experienced similar movements as its price declines back to the $3K zone. Consequently, ETH currently hovers only slightly above the parallel channel that we have identified previously. Traders should monitor for any further declines that may potentially lead to a rebound from the channel’s lower boundary in the near future, especially as the RSI approaches the oversold territory on the 4-hour chart.

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