🌳 U.S. Job Market Shows Robust Growth; Cryptocurrency ETFs Await SEC's Decision on Approval

05 Jan 2024, Friday

3:09 AM

🌳 U.S. Job Market Shows Robust Growth; Cryptocurrency ETFs Await SEC's Decision on Approval

BTC

ETH

S&P Futures 500

$44,278.16

$2,271.35

$4,734.50

(+3.26%)

 (+2.73%)

(-0.38%)

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. job market grows robustly; China's air travel nears pre-Covid levels (More in Macro & TradFi)
  • Grayscale, VanEck push U.S. Bitcoin ETFs; South Korea proposes crypto payment ban (More in DeFi & CeFi)
  • Litecoin, Maker, Lido DAO see wallet activity rise; FTX, Alameda move crypto funds (More in On-Chain)
  • BTC IV continues to increase while the term structure moves into further backwardation with a small kink over the weekend (More in Crypto Derivatives)
  • Both BTC and ETH currently trade in the middle of the range with ETH potentially seeing the previously bullish trendline as the new resistance (More in Crypto Technical Analysis)

Macro & TradFi

In December 2024, U.S. companies exhibited a robust hiring trend, with private payrolls expanding by $164K, the highest since August, as ADP Research Institute and Stanford Digital Economy Lab reported. This surge, predominantly in the services sector, contrasts with a decrease in manufacturing jobs and regional disparities in job growth. Notably, wage growth cooled further, marking the slowest pace since 2021, indicating a return to pre-pandemic labor market conditions and reducing concerns of a wage-price spiral. This data, showing a resilient job market with sustained economic growth and potential easing of inflation, is crucial for the Federal Reserve's policy decisions regarding interest rate adjustments. The overall labor market dynamics, especially wage trends, remain key indicators of economic stability and growth.

In other news, China is set to significantly recover its international air travel market by the end of 2024, reaching approximately 80% of its pre-Covid levels. According to the Civil Aviation Administration of China (CAAC), weekly international passenger flights are projected to increase to around 6,000 from the current 4,600, a notable rise from fewer than 500 flights per week at the start of 2023. This recovery is part of a broader agreement between the U.S. and China, with an emphasis on increasing direct flights between the two countries. The resumption of China-US direct flights has been slow, standing at just 63 per week by the end of 2023, compared to 340 pre-pandemic. In 2024, CAAC anticipates 690 million passenger trips, an 11% increase from 2023, and plans to expand traffic rights with Belt and Road nations while enhancing cooperation with Central Asia, the Middle East, and Africa. This recovery signals a significant step towards normalizing global travel.

Yesterday's U.S. equity markets displayed mixed responses following unexpectedly strong jobs data, casting uncertainty on the Federal Reserve's timeline for reducing interest rates. The Dow Jones Industrial Average slightly increased by 0.03%, contrasting with declines in the Nasdaq Composite and S&P 500, which dropped by 0.53% and 0.34% respectively. Notable movements included Apple's 1.27% decline, influenced by rating downgrades amid concerns over slowing iPhone sales and subdued demand. McDonald's shares also fell by 0.87%, impacted by boycotts in the Middle East. Investor focus is now turning towards key economic indicators including average hourly earnings, the unemployment rate, and Nonfarm payroll data, expected later tonight at 21:30 SGT. 

CeFi & DeFi

  • Grayscale and VanEck filed to list shares of spot Bitcoin ETFs in NYSE Arca and the Cboe BZX Exchange respectively
  • South Korea proposes ban on credit card payments for cryptocurrencies
  • Cathie Wood's ARK Invest offloads $25M of Coinbase shares
  • Gamma attempts to negotiate with hacker after $3.4M exploit
  • Crypto VC Polychain Capital confirms its founder’s Twitter account has been hacked

Grayscale Investments and VanEck are advancing the U.S. cryptocurrency investment landscape by filing with the Securities and Exchange Commission (SEC) to list shares of their proposed spot Bitcoin exchange-traded funds (ETFs) on the NYSE Arca and the Cboe BZX Exchange, respectively. These filings, which follow a similar move by Fidelity Wise Origin Bitcoin Fund, are integral to the ETF registration process and signal a growing interest in direct Bitcoin investment vehicles in the U.S. market. The SEC's pending decision on these applications, along with others like those from ARK Invest and 21Shares due for a potential ruling by January 10, could significantly shift the dynamics of cryptocurrency investments in the U.S. While the SEC has been cautious and has not approved any spot Bitcoin ETFs to date, the approval of such products would mark a major milestone, offering investors an alternative to the futures-based Bitcoin investment vehicles currently available. The SEC has yet to approve a spot BTC exchange-traded product for listing and trading on U.S.-based exchanges.

Meanwhile, South Korea's Financial Services Commission (FSC) is taking a firm stance on cryptocurrency transactions by proposing a ban on credit card payments for purchasing cryptocurrencies. This legislative proposal, announced on January 3, aims to amend the country's credit finance laws. The FSC's primary concerns are the potential illegal outflows of funds, money laundering risks, and the encouragement of speculative activities associated with South Korean citizens buying cryptocurrencies from foreign exchanges. Current regulations allow local cryptocurrency exchanges to facilitate transactions with identifiable deposit and withdrawal accounts, but these rules do not extend to foreign crypto exchanges. The FSC's proposal is open for public input until February 13, with a review and resolution process following. The regulator aims to implement this change in the first half of 2024, marking a significant shift in South Korea's approach to regulating cryptocurrency transactions and reflecting broader global concerns about the financial risks associated with digital currencies.

On-Chain

Moving on to on-chain, Santiment analysis indicates that Litecoin, Maker, and Lido DAO Token are experiencing a notable increase in wallet address activity, indicating a surge in their utility and engagement within the crypto ecosystem. Typically, such an uptick in address activity correlates with growth in market capitalization, reflecting heightened investor interest and confidence in these digital assets. While Maker and Lido DAO have witnessed corresponding increases in their market values, aligning with the enhanced activity, Litecoin has not yet experienced a similar rise in its market cap.


Elsewhere, according to Spotonchian, a recent transaction was noted involving FTX and Alameda Research depositing a significant amount of Crypto.com Coin, valued at approximately $4.17 million, to Coinbase. This transaction, completed this morning, is part of a larger pattern observed over the past two weeks, wherein FTX and Alameda have transferred a total of $13.99 million worth of various cryptocurrencies, including ETH, Crypto.com Coin, MATH, Maple, and Bluzelle to Coinbase. This series of deposits to Coinbase suggests that FTX and Alameda Research might be liquidating or reallocating a portion of their crypto holdings.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH. 
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained flat at 65.32% and 69.71% respectively.
  • The 30-day 25-delta skew (C-P) for BTC increased significantly to 3.75% while that of ETH decreased to 1.06%.
  • The futures market witnessed $125.38M liquidations, with shorts representing 60.35%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

38.60%

BTC

OKX

dYdX

27.79%

ETH

OKX

dYdX

26.44%

BNB

OKX

Bybit

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.


Bitcoin's (BTC) short-term 7-day implied volatility (IV) has encountered another spike, reaching a new monthly high as its price returns to the previous level before the ETF rejection rumors. Meanwhile, the 30-day IV remains relatively flat. This may suggest that traders anticipate the 30-day volatility to remain somewhat steady, possibly due to long-term holders taking profits on their positions. This could counteract the increasing demand if the ETF is approved to a certain extent.

The backwardation on the term structures for both BTC and ETH has become even more pronounced, particularly at the front end of the curve, as IVs continue to increase. A notable kink is observed on the 2-day expiry contracts, suggesting a lower probability that the SEC will make a decision on the ETF over the weekend. However, the further end of the curve remains relatively flat, indicating that the long-term expectation for BTC has stayed unchanged as the price bounces back.

Both the BTC 25-delta 30-day and 7-day call-put skew have remained relatively flat over the last 24 hours, maintaining a call premium state and indicating a persistent bullish sentiment. On the other hand, ETH has experienced a slight rebound in skewness as the 30-day skew flips back to positive in a call premium state. This suggests that the market may have potentially overreacted to the downside for ETH in the past few days.

Lastly, according to the report by @Paradigm, yesterday's Asia/Europe trading session was relatively quiet as the market adopted a wait-and-see approach for more news around potential ETF approvals. The top flows during this session included the acquisition of a 265x 23-Feb-24 $50,000 / 29-Mar-24 65,000 BTC Inverse Call Calendar, 2,000x 19-Jan-24 2,000 ETH Put, and 1,000x 6-Jan-24 2,450 ETH Call.

Crypto Technical Analysis

Moving to technical analysis, yesterday’s analysis remains valid with BTC continuing to oscillate within the identified parallel channel and slowly approaching the $45.5K resistance formed by the channel upper boundary and resistance observed since early 2022. However, high volatility is expected in the next few days as we see more developments related to ETF applications. If the price experiences a decline from negative news, BTC price may break through the channel. In such scenarios, the initial support zone might test $40.7K before potentially reaching the $39.5K level, identified by the lower trendline formed by local higher lows.

Observing ETH on the 4-hour chart, a comparable price movement is evident as it is presently traded within the middle range of the channel. However, the slight retracement observed in the last few hours has seemingly transformed the previous bullish trendline into a new resistance level, suggesting a potential shift to a bearish trend. In such a scenario, the lower boundaries of the channel serve as the immediate effective support, situated at $2.15K, representing roughly a 4% downside to the current level.

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