🌳Trump Faces Legal Setbacks Over Property Valuations; Kraken Explores Traditional Asset Trading in US and UK

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• Trump faces legal challenges; Malaysia boosts palm oil exports amid EU restrictions (more in Macro & TradFi)
• Kraken to explore stock trading; Binance sells Russia business to CommEX (more in DeFi & CeFi)
• $MKR whale deposited onto Binance, potentially selling at a 35% profit; Percentage of BTC holdings by long-term investors reaching the 2015 high (more in On-Chain)
• Options market shows declining BTC volatility; term structures for BTC, ETH indicate contango (more in Crypto Derivatives)
• BTC and ETH both concluded the session with minor price fluctuations amid heightened intraday volatility (Crypto Technical Analysis)

Macro & TradFi

A New York state judge, Arthur Engoron, ruled that Donald Trump, his eldest sons, and their business organization engaged in "persistent and repeated fraud" by significantly overvaluing properties in Manhattan, Florida, and golf courses in the US and Scotland. The judge ordered the dissolution of several of Trump's New York businesses for disseminating misleading information. While Trump's attorney, Christopher Kise, criticized the decision, this ruling adds to the legal challenges facing the former president, especially as another case by New York attorney-general Letitia James is imminent. Amidst these legal developments, Trump focuses on political rallies, notably opting for an event in Michigan over a Republican 2024 presidential debate in California.

In other news, Malaysia announced plans to double its palm oil exports to China to 500,000 tonnes annually, countering European restrictions on the commodity. This decision was unveiled during the 20th China-Asean Expo, where both nations signed investment deals worth $4.2B, including a significant agreement between Malaysia's Sime Darby Oils International and China's Guangxi Beibu Gulf International Port Group to establish a palm oil trading and distribution center in Qinzhou. This move comes as Malaysia and Indonesia, major palm oil producers, challenge stricter European Union regulations on deforestation-related commodities. The strengthened Malaysia-China trade relationship is a strategic pivot amidst rising global trade tensions.

U.S. equity indices presented a mixed picture, with the S&P 500 and NASDAQ Composite rising by 0.03% and 0.24%, respectively, while the DJIA declined by 0.2%. Brent crude reached an intraday high of $97.06 a barrel, its loftiest since November 2022, before settling at $96.55. Exxon Mobil advanced 3.26%, marking its fourth consecutive session of gains, propelled by the uptick in oil prices. Concurrently, Warner Bros. Discovery and Paramount Global registered gains of 3.18% and 2.57%, respectively, after resolving a 150-day writers' strike. Market observers now keenly anticipate the US GDP data slated for release at 20:30 SGT today.

DeFi & CeFi

• Kraken to explore stock trading
• Binance sells Russia business to CommEX
• Curve founder Michael Egorov deposits $35M CRV to settle debt on Aave
• Chaos Labs proposes to allocate $20M $DYDX tokens to V4 early users
• Terraform Labs founder Do Kwon opposes US SEC’s extradition request

US cryptocurrency exchange Kraken is reportedly exploring the possibility of offering trading for stocks and exchange-traded funds (ETFs) in the US and the UK. If implemented, this move would make Kraken the first cryptocurrency exchange to expand its trading services to traditional assets. The exchange is said to be planning to launch this service as early as 2024. Kraken Securities, a new division of the exchange, is responsible for this initiative and has already acquired the necessary regulatory permits in the UK, although it is still awaiting approval in the US. Kraken's move into traditional asset trading comes as the company seeks to broaden its offerings outside the US, as evidenced by its very recent acquisition of money license registrations in Spain and Ireland.

In other news, Binance has agreed to sell its Russia business to a newly launched crypto exchange, CommEX, as part of its effort to exit the Russian market due to compliance concerns. This move comes after Binance faced an inquiry by the US Department of Justice over whether Russian customers accessed the exchange in violation of US sanctions related to Russia's invasion of Ukraine. Binance will fully exit the Russian market and sunset all exchange services and business lines in the country over the next several months. CommEX will take over Binance's Russia business, but it will not onboard customers from the US, EU, and some other jurisdictions.

On-Chain

@spotonchain recently detected a substantial move in the crypto space, as a whale deposited 3,527 $MKR (equivalent to $5.34 million) into Binance as $MKR hit a new high of $1,527. A deeper dive into the whale's on-chain activity reveals an interesting narrative. At the onset of the month, this whale acquired $15 million worth of $MKR at an average cost of $1,123. Should they decide to sell on Binance, this would translate to a profitable position, with a 35% gain. Notably, the whale has maintained a holding of 10K $MKR, which potentially indicates his long-term bullish view on the token.

On another front, @reflexivityres, armed with data from Glassnode, made an intriguing observation. The percentage of BTC held by long-term holders is approaching its highest point since 2015 at nearly 75%. This signals a growing conviction among long-term investors who are steadfastly accumulating in the midst of a bearish market, despite the lower prices.

Crypto Derivatives

• Funding rates flipped to negative for BTC but maintained at positive for ETH
• Deribit Implied Volatility Index (DVOL) for BTC and ETH retreated to 35.49% and 32.69% respectively
• 30-day 25-delta skew (C-P) on both BTC and ETH plunged to -1.12% and -2.23%, respectively
• The futures market witnessed $92.28M worth of liquidations in the last 24 hours, with longs representing 58.38% of the total

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

In the options market, the 7-day implied volatilities (IV) for BTC have fallen significantly from 31.07% to 27.44%, close to the month’s lows of 27.03%. Similarly, the 30-day IV has fallen to 29.89%. This subdued demeanor may be attributed to the lack of regulatory updates in the crypto markets for the coming month.

Furthermore, the term structures for both BTC and ETH consistently portray contango, with no marked deviations. There is a slight dip at the front end of the curve, possibly due to the positive consensus projection of 2.1% for US GDP Growth Rate Quarter-on-Quarter.

Elsewhere, the 30-day 25 delta (C-P) skew on BTC rose to -1.12% from -2.21% whereas that of ETH rose slightly to -2.23% from -3.81%, indicating a near-term bearish sentiment for both major cryptocurrencies. Noticeably, the spread for ETH’s 7-day and 30-day skew is tighter than that of BTC, suggesting that market participants are more aligned in their short-term and medium-term expectations for ETH.

During the Asia/Europe session, @Paradigm highlighted distinct trading activities in the market landscape. For BTC, notable trades encompassed the purchase of 350x 29-Dec-23 $24K/$22K put spread options and the sale of 231x 27-Oct-23 $30K call options. In the ETH spectrum, significant transactions included the procurement of 2500x 13-Oct-23 $1.5K/$1.35K put spread options and the acquisition of 2000x 6-Oct-23 $1.5K/$1.4K put spread options.

Crypto Technical Analysis

Diving into the technical analysis, while BTC’s overall price movement has exhibited minimal changes, a noteworthy surge of intraday volatility occurred during the closing hours of yesterday's Asian trading session. Despite a rapid 2% price increase, BTC faced a swift rejection at the previously identified upper trendline, formed by local lower highs, quickly reverting to its usual trading range. It is worth mentioning that BTC's price opened above the 200-SMA and is now approaching the 100-day SMA. Our prior analysis remains applicable, indicating that in the event of a downturn, immediate support can be found at approximately $25,600, while in the case of an upward trend, the next resistance level stands at $26,800.

Shifting focus to ETH, a similar scenario unfolded, marked by extensive intraday volatility. Notably, the resistance encountered during yesterday's price surge was even more pronounced than what BTC faced, aligning with both the 200-day SMA and the trendline formed by local lower highs. Looking ahead, the immediate support level for ETH remains at $1,540, corresponding to the local low. Potential resistance is clearly visible around $1,600, serving as both a psychological resistance zone and the intersection point between the 100-day SMA and the downward-sloping trendline.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Bank of America CEO says Fed has won the near-term battle against inflation

• US durable goods orders beat expectations in boost to economy in third-quarter

• Russia's Putin orders government to stabilise retail fuel prices

• Oil rises on US crude draws, tight global supply

• Biden says government shutdown not inevitable

• Global stocks extend sell-off as bond yields surge

• Canadian dollar recovers from 2-week low as oil rallies

• Harsh reality of 'higher-for-longer' rates looms over US stocks

• TSX's decline since mid-month hits 5.75% as gold slides

• U.S. 10-year Treasury yield reaches level not seen in more than 15 years.

Crypto

• Curve Founder Michael Egorov Deposits $35M CRV to Settle Debt on Aave.

• Crypto Exchange Kraken to Explore Stock Trading: Bloomberg.

• Jade Protocol Faces Calls to Liquidate $31M Token Treasury.

• Terraform Labs Founder Do Kwon Opposes SEC's Extradition Request.

• Countries Should Set Up Legal Frameworks to Support CBDCs: BIS Chief.

• Binance Sells Russian Unit to Day-Old CommEX, Exits Country.

• Bitcoin miner Marathon mines invalid block in failed ‘experiment’.

• SEC's Gensler taken to task over crypto custody guidance again in House hearing.

• Chaos Labs Proposes to Allocate $20M $DYDX Tokens to v4 Early Users

• Global Payment Processing Giant MoneyGram to Launch Non-Custodial Crypto Wallet

• Arbitrum Odyssey Restarts with GMX

Deal Flow

• Ethereum Network Explorer Rated Labs Raised $12.9M, Led by Archetype

Yours sincerely,
Treehouse Research 🌳