🌳U.S. Consumer Spending Slows; MicroStrategy Bolsters Bitcoin Holdings Amid Economic Uncertainty

01 Dec 2023, Friday

2:31 AM

🌳U.S. Consumer Spending Slows; MicroStrategy Bolsters Bitcoin Holdings Amid Economic Uncertainty

BTC

ETH

S&P Futures 500

$37,675.25

$2,049.75

$4,573.00

(-0.28%)

 (+1.14%)

(+0.24%)

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

  • US consumer spending cools; China's manufacturing PMI indicates economic slowdown (More in Macro & TradFi)
  • MicroStrategy bought $600M of Bitcoin in November; KyberSwap hacker demands control over Kyber company (More in DeFi & CeFi)
  • Encouraging on-chain indicators for ETH emerge with the top CEX holdings hitting a 24-week low; A new wallet, suspected to belong to Michael Saylor, has amassed $446 million in BTC over the past month (More in On-Chain)
  • BTC's implied volatility continued to experience steady declines, with option flows focusing on purchasing cheap December volatilities (More in Crypto Derivatives)
  • BTC consolidates at $37.8K resistance; ETH faces key $2.1K strong barrier (More in Crypto Technical Analysis)

Macro & TradFi

In October, U.S. consumer spending exhibited a moderate increase of 0.2%, indicating a cooling in demand, a trend further supported by the smallest annual rise in inflation in over two and a half years. This slowdown aligns with the Federal Reserve's expectations, potentially signaling the end of its interest rate hiking campaign. Concurrently, the labor market is showing a gradual slowing, evidenced by an increase in weekly jobless claims and a surge in continuing claims, reaching a two-year high. These developments suggest a shift in the economy, with a decrease in labor demand and a potential impact on consumer spending, especially among low-income households. Additionally, the savings rate increase to 3.8% also reflects consumer caution amid recession fears. Despite these trends, the U.S. economy continues to grow robustly, defying recession predictions. The data collectively indicate a possible transition to a phase of slower economic growth.

Elsewhere, China's manufacturing activity contracted for the second consecutive month, with the manufacturing purchasing managers’ index (PMI) falling to 49.4, signaling a weakening momentum in the economy. This downturn challenges policymakers, especially amidst a slowdown in the debt-heavy property sector. The non-manufacturing PMI, indicating service sector health, also declined, reflecting broader economic headwinds. Despite a promising 4.9% GDP growth in the third quarter, the latest PMI data points to a potential loss of economic steam heading into 2024. This slowdown may prompt the Chinese government to consider further fiscal and monetary support measures to counter weak global demand and sustain growth.

Yesterday, U.S. stock markets displayed mixed results on the final trading day of November. The Nasdaq Composite edged down by 0.25%, while the broader S&P 500 and the Dow Jones Industrial Average saw modest gains, increasing by 0.38% and 0.04%, respectively. The OPEC+ meeting’s outcome in the commodities sector led to some disappointment among traders. The group decided on additional supply curbs amounting to approximately 900,000 barrels per day. Market participants are now turning their attention to the release of the U.S. ISM manufacturing PMI for November, scheduled for 23:00 SGT, is highly anticipated as it will provide insights into the manufacturing sector's health and could influence market sentiment.

DeFi & CeFi

  • MicroStrategy bought $600M of Bitcoin in November, increasing holdings by 10%
  • KyberSwap hacker demands control over the company
  • Polygon accused of giving DraftKings preferential treatment
  • Binance pilots banking triparty agreement to help institutional investors to manage counterparty exposure
  • Institutional crypto trading platform Talos taps into Uniswap’s liquidity
  • Hong Kong Securities Trade Group proposes Initial Coin Offering portal
  • Digital asset investment platform Fasset wins operational license in Dubai
  • Rarible’s RARI Foundation taps Arbitrum for royalty-embedded EVM chain
  • Celsius grants access to withdrawals for eligible crypto holders
  • AntPool agrees to refund $3M Bitcoin transaction fee

MicroStrategy (MSTR), known as the largest corporate holder of Bitcoin (BTC), increased its cryptocurrency holdings by 10% in November, acquiring 16,130 BTC for $608M at current prices. The software developer, led by Michael Saylor, purchased these BTC using $593.3M in cash, at an average price of $36,785 per BTC, as per a regulatory filing on Thursday. This brings the company's total BTC holdings to approximately 174,530 BTC, purchased at an average cost of $30,252 per coin. MicroStrategy has engaged with financial firms Cowen and Company, Canaccord Genuity, and BTIG to potentially offer up to $750M worth of class A common stock. Following this news, MSTR shares experienced a slight decline of 0.82%, trading at $502.96 during early Nasdaq trading.

In other news, the hacker responsible for the $46M KyberSwap exploit has demanded "complete executive control" over the Kyber company in exchange for the stolen funds. In an on-chain message issued on November 30, the hacker requested taking over the governance mechanism, KyberDAO, all company-related documents, and assets. They proposed buying out the company's executives, doubling employee salaries, and offering a 12-month severance package for those opting to leave. Additionally, they pledged to benefit token holders and investors by revitalizing the tokens' value and transforming Kyber into a completely new cryptographic project. Liquidity providers were offered rebates equating to 50% of their recent market-making losses, with the hacker stating this is more than deserved but less than what might be wanted. The ultimatum demands compliance by Kyber's team by December 10, threatening nullification of the treaty if not met, or if any third parties inquire about the trades executed on Kyber.

On-Chain

According to a recent analysis by @santiment, the largest holding addresses on ETH reveal an optimistic trend. Notably, the top 10 exchange wallets have dwindled to approximately 8 million ETH, marking a 24-week low. This suggests a declining trust in centralized exchanges, possibly influenced by recent events involving CZ and Binance. The shift towards self-custody is generally seen as a bullish sign, alleviating potential selling pressures. Conversely, the top 10 non-exchange wallets have just exceeded 41 million ETH, indicating that major holders continue to accumulate despite recent market fluctuations, portraying a robust long-term outlook for ETH.

On a separate note, @lookonchain has detected a recently established wallet amassing over 12,000 BTC (equivalent to $446 million) at an average price of $36,961 in the past month. Given the recent MicroStrategy 8-K filings indicating an accumulation of nearly $600 million in BTC in November, speculations arise that this address may belong to Michael Saylor or MicroStrategy Inc. This further bolsters the optimistic perspective for Bitcoin, especially considering the potential ETF approvals anticipated at the beginning of the next year.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH declined to 49.65% and 50.03%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC dropped to 4.40% while that of ETH stayed relatively flat at 2.93%.
  • The futures market witnessed $43.13M liquidations, with longs representing 56.25%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

14.88%

BNB

Bybit

OKX

8.37%

DOGE

OKX

dYdX

6.99%

LTC

OKX

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.


BTC’s 30-day implied volatility (IV) has continued to experience steady declines, indicating a degree of certainty in the expectations for the month ahead. The 7-day IV has decreased further to 40.97%, signaling even more confidence in the short-term horizon, possibly in response to the lack of catalysts in the immediate future.

The term structure for BTC continues to exhibit a contango pattern, showing minimal variations in the last 24 hours, except for marginal declines in near-dated contracts. This supports the earlier thesis on the market's consistent expectations.

On the other hand, while the 25-delta 30-day call-put skew has stayed relatively flat, the 7-day skew has seen a noticeable decrease, moving from 5.01% to 3.03%, indicating a move toward a neutral sentiment in the market.

Lastly, @Paradigm reported a concentrated BTC flow during the Americas trading hours on 30-Nov-23. Specifically, traders were keen on buying lower December volatilities while simultaneously selling those of February through call calendar spreads. Some notable trades included the purchase of 300x +1 29-Dec-23 40,000 calls and -1 23-Feb-24 58,000 custom structure, as well as 300x +1 29-Dec-23 41,000 calls and -1 23-Feb-24 58,000 custom structure.

Crypto Technical Analysis

Examining the daily chart for BTC, we observe that the price is consolidating around the $37.8K mark. This price point is critical as it represents the upper bound of the ascending triangle pattern that has formed over the last few weeks. A decisive breakout above this level could potentially lead to a test of the next significant resistance near the $42K region, which would increase approximately 10.84% from the current price levels. On the flip side, should the price fail to sustain the upward momentum, we may see a retraction towards the support level at around $31K, a drop of roughly 14.79%. The RSI is currently hovering around 62.02, indicating a slight momentum towards the overbought territory.

Moving on to the daily ETH chart, the price is currently testing the $2.08K level, indicating a phase of consolidation after a recent uptrend. The $2.1K price level emerges as a formidable resistance barrier that has not been conclusively breached throughout the year. Should the price convincingly breach the immediate resistance zone around $2.1K, we could anticipate moving towards the next resistance level near $2.5K, representing an approximate 15.66% increase from the current levels. Inversely, if selling pressure intensifies and the price breaks below the current support around $1.87K, a potential decline of about 9.5% could ensue. The RSI hovers just below the 60.94 mark, suggesting moderate bullish momentum with no immediate signs of overbought conditions. The consolidation within this price range is crucial, and traders will likely watch for a confirmed breakout or breakdown to gauge the market's next significant move.

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