🌳U.S. Private Payrolls Miss Forecasts; Ripple's Singapore Arm Secures Key License Amid Legal Triumphs

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• U.S. private payrolls underperform expectations; Biden approves vast student loan debt cancellation (More in Macro & TradFi)
• Ripple secures Singapore major payment institution license; Singapore-based DBS bank is cautiously entering crypto (More in DeFi & CeFi)
• On-chain detective uncovers SIM-swapping theft; Glassnode analyzes DeFi token dynamics and preferences (More in On-Chain)
• The derivatives market remains quiet as IVs continue to drop for both major cryptocurrencies (More in Crypto Derivatives)
• BTC challenges key resistance levels; ETH navigates toward pivotal support after retracement (More in Crypto Technical Analysis)

Macro & TradFi

In September, U.S. private payrolls undershot expectations, with an addition of 89,000 jobs, compared to the anticipated 153,000, as per the ADP National Employment Report. While August's figures were marginally adjusted up to 180,000 from 177,000, the labor market exhibits signs of moderation, influenced by a cumulative 525 basis points in interest rate hikes by the Federal Reserve since March 2022. Despite the surge in unfilled positions, marking a two-year high, and a favorable 1.51 job openings to the unemployed ratio in August, the reliability of the ADP report as a predictor for the broader Labor Department's employment data remains questioned. Upcoming Bureau of Labor Statistics data is projected to reveal a 160,000 private payroll increase for September, with total nonfarm payrolls estimated at a growth of 170,000.

Elsewhere, the Biden administration has greenlighted debt cancellation for an additional 125,000 student loan borrowers, culminating in $9 billion in forgiveness. This decision follows the recent resumption of federal student loan payments after a prolonged hiatus and the Supreme Court's disapproval of President Biden's primary student loan forgiveness initiative. The current wave of debt relief leverages three pre-existing programs, addressing past systemic issues. Among the beneficiaries, 53,000 will benefit from the Public Service Loan Forgiveness program, approximately 51,000 will receive relief due to a reevaluation of past payments revealing prior administrative oversights, and around 22,000 with total or permanent disabilities will get debt absolution via data collaboration with the Social Security Administration. To date, under Biden's tenure, debt cancellations amount to $127 billion, impacting nearly 3.6 million borrowers.

US equities surged in response to subpar jobs figures, fueling speculation that the Fed might hold off on further rate hikes. The S&P 500 rose by 0.8%, the NASDAQ climbed 1.45%, marking its most robust daily performance since August, and the DJIA appreciated by 0.39%. Meanwhile, yields on the 10-year US Treasuries dipped to 4.73%, after touching a 16-year peak of 4.88%. In contrast, the eurozone saw its swiftest monthly decline in retail sales for the year in August, indicating rising borrowing costs are impacting consumer expenditure. Market participants await the Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings data, scheduled for release on 6 October at 20:30 SGT.

DeFi & CeFi

• Ripple secures Singapore major payment institution license
• Singapore-based DBS bank is cautiously entering crypto
• Hong Kong stock exchange launches blockchain-based settlement platform
• Polygon co-founder Jaynti Kanani steps down
• Yield Protocol to wind down by year’s end

Ripple's Singapore arm has received a major payments institution license from the Monetary Authority of Singapore, allowing it to continue offering digital payment token services in the region. Its subsidiary Ripple Markets APAC Pte Ltd obtained the formal licensing, after Ripple’s preliminary approval in June. This comes as Ripple wins another significant legal victory in its ongoing case against the U.S. Securities and Exchange Commission (SEC). The company, which does about 90% of its business outside the U.S., views Singapore as a fintech and digital asset hub that supports innovation, consumer protection, and responsible growth.

Singapore-based DBS Bank has yet to formally enter the crypto scene, despite being qualified. Head of digital assets Evy Theunis explains that the decision was to protect its 14-year-long reputation of being the “safest bank in Asia”. DBS remains meticulous and cautious with its crypto advancements. The banking behemoth currently only offers BTC, ETH, XRP, BCH, DOT and ADA trading in its system and tracks them down to every wallet the token has touched, which is difficult for stablecoins due to bridging and their multichain nature. DBS is also focusing on institutional players and customers in the crypto space, who are similarly cautious, and evolving its offerings for accredited investors. The bank is involved in numerous government-related crypto projects, and heavily encourages builders to engage with institutions in exploring use cases.

On-Chain

In an analysis, on-chain detective ZachXBT highlighted that a single malicious actor successfully extracted approximately $385K (equivalent to 234 ETH) within a 24-hour timeframe via SIM-swapping tactics. This particular method exploits the ability to port a phone number between devices with differing subscriber identity modules. The affected friend.tech users include sumfattytuna, mcwop23.eth, KingMgugga, and jalgi. To obfuscate the illicit gains, the perpetrator moved the funds across various wallets before depositing them into two separate centralized exchanges. As a preventive measure against such vulnerabilities, ZachXBT advises against associating one's phone number with friend.tech.

In a recent Glassnode analysis of DeFi token dynamics, the team has found that since the start of 2022, there's been a notable uptick in wstETH supply, with an addition of over 3 million tokens. This trend suggests a shifting user preference towards wstETH over its counterpart, stETH. One plausible reason, as indicated by Glassnode, is the tax implications; while 70.5% of wstETH is held in smart contracts, the automatic balance adjustments of stETH might be perceived as taxable events, prompting users to favor the wrapped version, which accrues value without altering token counts. On the flip side, wETH has seen its supply plummet by 62% during the same duration, underlining a reduced demand and reinforcing observations of its decreased deployment in smart contracts.

Crypto Derivatives

• Funding rates remained positive for ETH and flipped to a slight negative for BTC
• Deribit Implied Volatility Index (DVOL) for BTC and ETH dropped to 37.17% and 34.80% respectively
• 30-day 25-delta skew (C-P) for BTC remained at -0.90% while that of ETH dropped further to -3.67%
• The futures market witnessed $63.70M worth of liquidations yesterday, with longs representing 66.39% of the total

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

As BTC continues to fluctuate within its current range, implied volatilities (IVs) have been on a decline. The 7-day IV has dropped from 31.75% to 29.30%, and the 30-day IV has gone down from 32.92% to 32.58%.

Both the term structures of BTC and ETH are still showing a contango state. Besides the decrease in IV for near-dated options, the overall curve has experienced minimal changes in the past 24 hours. This suggests that traders anticipate that prices will remain within the current range in the near future.

The 30-day 25-delta (C-P) skew for BTC has also seen a further decrease in the past 24 hours, despite its recent reversal to the upside. Specifically, BTC's 7-day skew now stands at -2.96%, indicating that traders are likely being cautious about potential downsides and are focusing on put options for capital protection.

This analysis is supported by @Paradigm, which reported that option flows during yesterday's trading session were primarily centered on downside protection. Noteworthy trades included the acquisition of a 312x 20-Oct-23 26500/24000 BTC Put Spread and a 149x 29-Dec-23 22000/16000 BTC Put Spread.

Crypto Technical Analysis

Moving on to technical analysis, on the daily chart, BTC’s price currently orbits around the 27.7K mark, having successfully surged above the descending channel pattern pinpointed last week. This bullish momentum carried BTC to challenge the 28K resistance with RSI currently standing at 60.68, reflecting a continued upward momentum, although it subsequently experienced a slight pullback. Critically, this price movement is currently contending with the bull market support band (20w SMA, 21w EMA), now acting as a formidable resistance. If BTC manages to break above both the support band and the 28K resistance level, it may target the subsequent resistance at 30.8K—potentially signaling an 11.42% appreciation from its current stance. On the flip side, the immediate support to watch remains at 25.8K.

Moving on to ETH, the asset currently trades around 1.64K, having experienced a retracement upon encountering its bull market support band. The price trajectory now appears to be leaning towards its support level of 1.63K. If this crucial support yields, we might observe a decline toward the subsequent support stationed at 1.47K, reflecting a potential 10.91% decrease from its present valuation. In contrast, a significant resistance-turned-support to monitor stands at 1.95K. The RSI registers at 50.72, suggesting a neutral selling environment.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• World's biggest bond markets hit by wave of selling, then bounce

• South Korea's Doosan Robotics shares jump 127% in trading debut

• US government shutdown later this year would not hurt rating - Fitch

• US service sector slows modestly in September -ISM survey

• UAW, automakers signal progress after days of stalemate -sources

• Nasdaq leads Wall St rebound after weaker-than-expected data

• TSX holds near one-year low as energy loses more than 4%

• India cenbank seen holding rates steady Friday but striking hawkish tone

• S.Korea factory activity shrinks again in Sept, mildest slump in 15 months - PMI

• Japan service activity growth slows down in September - PMI

• U.S. private payrolls rose 89,000 in September, far below expectations, ADP says.

• Asia-Pacific stocks rise after U.S. Treasury yields pull back from 16-year highs.

Crypto

• Ripple Says Singapore License Formally Approved.

• Asian Banking Giant DBS Is Patiently Wading Into Crypto.

• Hong Kong Stock Exchange Launches Blockchain-Based Settlement Platform.

• Polygon Co-Founder Jaynti Kanani Steps Down.

• DeFi Project Yield Protocol to Wind Down by Year's End.

• Central Bank Group Unveils Data Project Mapping Crypto Transfers.

• Stellar, PwC publish ‘framework’ to judge emerging market blockchain projects.

• Su Zhu’s $36M mansion transformed into eco-farm post-3AC collapse: Report.

• Alameda sent $4.1B of FTT tokens to FTX before crash: Nansen report.

• El Salvador launches first Bitcoin mining pool as Volcano Energy partners with Luxor.

• New book reveals Binance CEO CZ rejected SBF’s $40M request for futures exchange.

Deal Flow

• Blackbird closes $24M Series A financing round led by a16z

• Hong Kong crypto venture capital firm CMCC Global launches US$100 million fund

Yours sincerely,
Treehouse Research 🌳