S&P Futures 500
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 GDP outperforms expectations; European Central Bank keeps steady interest rates (More in Macro & TradFi)
- SEC delays the approval of Greyscale’s ETH ETF; Ethereum developer progressing on the Dencun upgrade on Sepolia testnet on January 30 (More in DeFi & CeFi)
- Grayscale deposits 9,434 BTC; Celsius transfers 459,561 ETH to several CEX (More in On-Chain)
- BTC contango persists; sentiment shifts mildly bullish with recent economic data (More in Crypto Derivatives)
- BTC enters critical resistance level of $40K; ETH 4-hour chart suggests short-term bullish sentiment (More in Crypto Technical Analysis)
Macro & TradFi
The U.S. economy outperformed expectations, with its GDP growing at a 3.3% annualized rate in the last quarter of 2023, and a 2.8% increase in consumer spending bolstering the year's robust economic performance. Inflation has cooled, aligning with the Federal Reserve's target, prompting the market to lean towards the possibility of an interest rate cut in March. Despite the Federal Reserve's aggressive rate hikes, the U.S. economy demonstrated resilience, supported by strong employment and easing inflation. This has allowed the U.S. to solidify its position as the world's largest economy, surpassing China with a nominal GDP growth of 6.3% in 2023, powered by strong consumer spending. This economic surge contrasts sharply with China's 4.6% GDP increase, as the Asian giant grapples with a real estate crisis and deflationary pressures. This economic vigor may bolster President Joe Biden's position ahead of the elections, as consumer sentiment improves. However, forecasts suggest economic growth may slow in the first half of 2024, with the labor market cooling and potential challenges in credit availability and consumer demand.
In other news, the European Central Bank (ECB) has maintained interest rates at 4% and remains committed to combating inflation, even as discussions about potential rate cuts begin to surface. The ECB's decision reflects a cautious approach amid signs that inflation pressures may be easing, with some modifications in their policy statement indicating a shift in tone. While the current focus is on inflation control, ECB officials indicate that rate-cut discussions might begin as early as March, with a potential rate cut possibly happening in June if data confirms a continued decline in inflation. Despite the ECB's firm stance on interest rates, there's growing speculation among investors about the timing and pace of future rate cuts. This speculation is fueled by differing views on economic growth and the impact of past rate hikes across the Eurozone. The ongoing economic challenges, including weak growth, subdued commodity prices, and high interest rates, are expected to continue influencing inflation, which may not return to the ECB's 2% target until 2025. As the ECB navigates these complexities, the global economic context, including potential disruptions in the Middle East and labor market dynamics, remains crucial in shaping their monetary policy decisions.
Lastly, the S&P 500 continued its record-breaking streak, closing at a new high of 4,894.16, marking a 0.53% increase and making it the fifth consecutive peak. This rally was fueled by positive economic data showing the U.S. economy grew faster than expected in the fourth quarter, with a notable GDP growth rate of 3.3%. Despite Tesla's shares tumbling 12% following a sales forecast that fell short of expectations, the broader market remained upbeat. The Dow Jones Industrial Average also saw an upswing, rising 0.64% to close at $38,049.13. Meanwhile, the Nasdaq posted a modest gain of 0.18%, ending the session at $15,510.50. In the healthcare sector, Humana's stock dropped 11.7% after projecting lower annual profits, influencing a 0.2% decline in the S&P 500 healthcare sector index. On the other hand, Comcast rose 3.4% after surpassing quarterly revenue estimates, and American Airlines surged 10.3% on a positive profit forecast. Overall, market sentiment was buoyed by strong earnings reports, with 82% of S&P 500 companies exceeding expectations so far.
CeFi & DeFi
- Greyscale spot Ether ETF application decision delayed by SEC
- Ethereum developers set timeline for final ‘Dencun’ testnet upgrades
- UK government says Digital Pound legislation will protect privacy and control
- Swan Bitcoin unveils mining unit as parent company prepares to go public
- Optimism-based Beam wallet to facilitate Amazon purchases through the Join app
The U.S. Securities and Exchange Commission (SEC) has postponed its decision on Grayscale Investments' application to convert its Ethereum trust product (ETHE) into an exchange-traded fund (ETF). This follows a similar delay yesterday in BlackRock's ETF application for Ethereum. The filings on Ethereum ETFs now seek public input on various questions, including whether arguments supporting bitcoin ETFs apply to Ethereum, concerns about Ethereum's susceptibility to fraud and manipulation, and the correlation between spot and futures markets. The SEC is exploring public opinions before making a decision.
Meanwhile, Ethereum developers are progressing with the Dencun upgrade, the blockchain's major hard fork aimed at implementing "proto-danksharding" to reduce transaction costs on layer 2 solutions. The dress rehearsal for the protocol changes will occur on the Sepolia test network on January 30 and on the Holesky test network on February 7. The developers are testing the changes on these testnets before planning the upgrade on Ethereum's mainnet, with a tentative timeline set for the end of February or early March. The Dencun upgrade aims to improve scalability and reduce gas fees on the Ethereum network.
According to Lookonchain, Grayscale transferred 9,434 BTC, valued at $376.5 million, to CoinbasePrime, marking a modest decrease from the previous day's $579 million deposit. This activity represents one of the smallest daily outflows since Grayscale's GBTC converted to a spot Bitcoin ETF in January. The reduced pace suggests a slowdown in investors exiting GBTC positions. However, Grayscale's ability to sustain this trend may hinge on its competitiveness in lowering GBTC management fees, as this factor could influence ongoing outflow rates.
According to Spotonchain, Celsius Network, a beleaguered crypto lending firm, recently transferred approximately $40 million in ETH to Coinbase, a prominent cryptocurrency exchange. This transfer aligns with the company's ongoing efforts to liquidate its crypto assets, primarily Ethereum, to fulfill creditor obligations. Notably, ETH comprises a significant portion of Celsius' reserves. This action is part of a larger series of transactions involving substantial cryptocurrency exchanges like Binance and FalconX, signifying Celsius' tactical approach to managing its assets amid the recent appreciation of ETH’s value and its broader financial challenges. The decision to move assets to Coinbase, suggests a potential preparation for selling these assets to generate necessary liquidity for creditor repayment.
- Funding rates remained positive for BTC and ETH.
- Deribit Implied Volatility Index (DVOL) for BTC and ETH fell back to 43.93% and 45.95%, respectively.
- The 30-day 25-delta skew (C-P) for BTC fell to -1.87% while that of ETH fell to -3.11%.
- The futures market witnessed $83.94M liquidations, with longs representing 60.14%.
Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities
Net Annualized APR
Perp (USDT pair)
Source: @CexyArbBot Telegram Bot
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.
The IV of BTC has shown notable stabilization, indicating a decrease in market volatility following an initial significant drop. The 7-day IV fell to 39.49%, closely aligning with the 30-day IV, which remains consistent at 41.20%. This fall follows the U.S. economic growth of 3.3% in the fourth quarter of 2023, defying fears of a recession.
The term structure of BTC has predominantly maintained fits contango shape, reflecting the pattern observed the previous day. IV in the front end of the curve dipped further as near-term volatility expectations decreased, possibly due to the digestion of a soft landing of the US economy by the market participants following the robust GDP data, thus leading to reduced demand for protective options in the immediate term.
The 25-delta call-put skews for Bitcoin indicate a shift in sentiment. The near-term bias, as evidenced by the 7-day skew, has ameliorated to -2.00%, reflecting a recovery from more bearish depths. This suggests a short-term change in attitude among cautiously optimistic traders. In a similar vein, the 30-day skew has edged to -1.87%, which while still indicative of bearish sentiment, signals a moderation in the medium-term outlook. Collectively, these skews imply that while option traders continue to approach the market with prudence, there's a small pivot towards a more bullish stance as we look further out on the time horizon.
Lastly, @Paradigm highlighted that option flows during US Hours emphasized downside coverage with strategic put purchases and structured positions. Key BTC trades included the purchase of a custom structure involving 200x 26-Jan-24 40/42k Puts and 2-Feb-24 40/42k Puts, as well as a sold position of 100x 2-Feb-24 43k Calls. Noteworthy ETH trades featured the purchase of 7250x 23-Feb-24 2400 Calls and a complex sale involving 2000x 16-Feb-24 2200 / 29-Mar-24 2200 Put Calendars.
Crypto Technical Analysis
Onto technical analysis, BTC is hovering below its critical resistance zone of $40K, closely shadowed by an established support level near $38.2K. BTC’s sentiment has been neutral the past few days but leans towards the bullish side as seen by the RSI level consolidating in the 42 to 45 range. Currently, the Moving Average Convergence Divergence (MACD) is hinting at a short-term bullish sentiment from its histogram expanding positively. Looking ahead, the $40K zone should be monitored on whether it will hold at this psychological level.
Moving on to ETH, ETH’s 4-hour chart reveals an emerging uptrend, as evidenced by an RSI of 41 currently, as compared to 30 just 2 days ago, suggesting a possible short-term bullish momentum. The MACD indicator reinforces this sentiment, displaying a bullish histogram with the MACD line crossing over the signal line. Currently, ETH is trading around $2.23K and is establishing a support zone between $2.18K and $2.16K. Should the market sentiment continue on its trend, there's a potential for price action to challenge the nearest resistance at approximately $2.3K, which would constitute an approximate 3% increase from the current price. Alternatively, should the market sentiment reverse and turn bearish, there could be an immediate fallback to the support level of $2.18K, which aligns with historical support.
Access institutional-grade commentary on TradFi × Crypto markets
By Treehouse Research
Treehouse Research 🌳