🌳United States and China Set to Re-engage in Regular Dialogue; JPMorgan’s Ali Moosa to Oversee Bahrain Crypto-friendly Bank

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• United States and China set to re-engage in regular conversation; China’s economic landscape continues to show uncertainty (more in Macro & TradFi)
• Singapore’s Whampoa Group recruited JPMorgan’s Ali Moosa to oversee Bahrain crypto-friendly bank; MakerDAO face $1.84M loan default from RWA borrower (more in DeFi & CeFi)
• 1inch deploy $10M to secure 6,088 $ETH; Memecoins eclipse stablecoins in gas consumption (more in On-Chain)
• BTC and ETH show contango structures; BTC 30-day put skew widens (more in Crypto Derivatives)
• BTC and ETH continue to trade sideways as they approach their respective quarterly lows (more in Crypto Technical Analysis)

Macro & TradFi

In a pivotal effort to mitigate ongoing bilateral tensions, the United States and China consented to engage in regular conversations addressing commercial issues and restrictions on technology. This commitment was unveiled during a high-profile visit to Beijing by U.S. Commerce Secretary, Gina Raimondo. The agreement is seen as a crucial step towards mending the fragile ties between these global superpowers, building upon recent diplomatic visits. Raimondo's intensive four-hour negotiation with China's Commerce Minister, Wang Wentao, culminated in a decision to launch two new dialogue channels. These dialogues hold significant importance, particularly considering the halt in regular bilateral talks last year following a contentious visit to Taiwan by U.S. Representative Nancy Pelosi. Both nations, acknowledging the intertwined nature of their economies, are showcasing a renewed emphasis on fostering open communication and collaboration.

On the other hand, China's economic landscape continues to be shrouded in uncertainty. Recent adjustments by economists have led to a revised 2023 GDP growth projection, now down from an initial 5.2% to a slightly more modest 5.1%. While Chinese stocks experienced an early surge, the momentum couldn't be sustained, leading to most of these gains evaporating by the end of the Monday trading session. This ebb and flow in the market is further complicated by the impending record outflow from foreign funds, set to mark this month. There's a growing belief that a stimulus “bazooka” could be the key to winning back investor confidence, however, a tangible response from policymakers remains absent.

U.S. equities rose as traders await a flurry of economic data over the next few days that will impact the Fed's policy decision in September, with the DJIA, S&P 500, and Nasdaq Composite climbing 0.62%, 0.63%, and 0.74%, respectively. Meanwhile, European stocks followed Asia higher in morning trade on Monday, driven by technological shares and Chinese economic rejuvenation measures. The pan-European Stoxx 600 advanced by 0.5%, while China's strategic move to halve the stamp duty on stock trading prompted the CSI 300 index to surge, settling at a 1.2% gain. The U.S. sees potential monetary tightening, with Jay Powell of the Federal Reserve highlighting persistent inflation concerns, causing the dollar to rise by 0.1% against major global currencies.

DeFi & CeFi

• Singapore’s Whampoa Group recruited JPMorgan’s Ali Moosa to oversee Bahrain crypto-friendly bank
• MakerDAO face $1.84M loan default from RWA borrower
• Layer2 network Shibarium goes live again
• SEC issues first enforcement action targeting NFTs
• Oman announced $800M investment in crypto mining

The Whampoa Group, a Singapore-based family office, has recruited Ali Moosa from JPMorgan Chase & Co. to oversee their new digital bank in Bahrain which offers services including payments and settlement for crypto companies. Whampoa Group received preliminary approval from Bahrain in May to establish Singapore Gulf Bank, which is set to launch in December. The bank aims to bridge conventional and digital financial services and facilitate financial integration across Asia, the Middle East, and North Africa. Ali Moosa will hold the position of executive vice chairman at Singapore Gulf Bank, concluding his 30-year tenure at JPMorgan where he served as regional head and vice chairman for the central and eastern Europe, Middle East, and Africa businesses. This move aims to address the challenge of providing reliable banking services for crypto companies following the risks highlighted by the digital-asset market decline last year.

Shifting our focus, the impending default of tokenized loans on Centrifuge, a blockchain-based credit platform, has put MakerDAO’s $1.84M investment at risk of loss. ControlFreight, the underwriter of the distressed credit pool, alerted that the largest borrower in the $2.7 million pool is facing liquidation due to a legal dispute. It previously created $1.84 million worth of DAI from Maker to support trade finance transactions and freight forwarding invoices. However, an intellectual property conflict led the Australian Supreme Court to threaten liquidation to the company, halting payments to debtors and affecting the loans. On one hand, the potential loss of Maker's investment in Centrifuge should not destabilize DAI, which is backed by around $7 billion worth of assets. On the other hand, the situation highlights risks in Maker's strategy of investing in real-world assets, including the lendings to non-crypto businesses.

On-Chain

According to @lookonchain, the 1inch Investment Fund wallet has deployed $10M to secure 6,088 $ETH at a price point of $1,655. Diving further into their trading history, 1inch had earlier amassed 17,000 $ETH, totaling $26.8M, over three distinct purchases on Jan 13, Feb 9, and Mar 14, averaging an entry price of $1,569. Capitalizing on market dynamics, the wallet subsequently divested 11,000 $ETH on July 5, cashing in at $1,906 per ETH, yielding an impressive profit margin of roughly $3.7M. Such trading patterns underscore the positive perception of the long-term outlook for $ETH, and the potential for strategic gains even amidst fluctuating market conditions.

Recent on-chain data reported by @santimentfeed highlights an array of memecoins unexpectedly eclipsing established stablecoins such as USDT and USDC in gas consumption. This surge in fee distributions for such assets is indicative of heightened speculative trading behaviors, suggesting potentially volatile sentiment amongst market participants.

Crypto Derivatives

• Funding rates for BTC and ETH turned positive.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH maintained at 36.20% and 37.65%, respectively.
• 30-day 25-delta skew (C-P) for BTC decreased to -2.28% while ETH moved slightly lower to -4.82%.
• The futures market witnessed $46.26M worth of liquidations since Friday with longs representing 68.29% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Bitcoin's ATM IV has remained relatively stable since Friday. Presently, the 7-day and 30-day ATM IV stand at 31.29% and 31.60% respectively, mirroring the low volatility levels observed in July. This stability suggests a consistent market sentiment and a lack of catalysts for short-term price fluctuations.

Both BTC and ETH term structures remain in contango, showing minor fluctuations in IVs along the curve, reflecting the subdued price movements in the past day.

Notably, BTC's 30-day (C-P) skews have dipped from -0.28 to -2.28, which marks a monthly low. Similarly, the 7-day skew has exhibited a drop to -3.96. This movement underscores a stronger bearish sentiment in the short-term BTC market, suggesting traders are increasingly hedging or betting on downside potential.

Lastly, @Paradigm highlighted option flows this week, emphasizing downside coverage with strategic put purchases and structured positions. Key BTC trades encompassed the procurement of 1200x 29-Sep-23 23/22/32k Put Spread Collars, 375x 29-Sep-23 24000/21000 Put Spreads, and a singular transaction that involved the sale of 200x 1-Sep-23 26000 Puts.

Crypto Technical Analysis

Onto technical analysis, BTC maintains its trading range between $25.8K and $26.6K on the 4-hour chart, exhibiting minimal volatility. The 50-Simple Moving Average (SMA) line, while flattening, continues its position below the 50-SMA, reflecting the persisting bearish sentiment. Should the lower boundary of the channel fail to hold, the subsequent support level rests around $24.8K - $25K, marking the quarterly low point. Conversely, a breakout towards the upside has the potential to open avenues towards $28.3K, indicative of an 8% potential gain. While the RSI has reverted to the normal zone on the 4-hour chart, it remains within the oversold territory when observed on the daily timeframe, registering at 27.55.

Shifting focus to ETH, a similar scenario of limited oscillations was seen in its recent trading session. The 4-hour chart reveals the emergence of a minor triangle pattern. As the price of ETH nears the end of this triangle, traders should anticipate escalated volatility in the imminent future. Simultaneously, the lower boundary of the triangle aligns with the immediate support level, approximately at $1.63K, which also corresponds to the quarterly low, thereby augmenting the strength of this support level. With a concurrent upturn in the RSI, traders might contemplate the potential for a reversal towards the upside.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Wall Street ends higher as investors await US inflation, jobs data

• Evergrande loses $2 bln in value as trade resumes; extends creditor voting

• Powell signals no retreat, no surrender

• Vanguard joins BlackRock, cuts support for shareholder items on climate, social issues

• US stocks close green, Treasury yields waver as crucial data awaits

• SEC probes Change Company over mortgage-backed securities sold to Wall Street - Bloomberg News

• TSX hits two-week high on Monday on materials, energy stock gains

• Nvidia's forward PE ratio tumbles to lowest in eight months

• Google to begin selling maps data to companies building solar products.

• Asia markets rise as Wall Street comes off winning day; Japan unemployment higher than expected.

• OpenAI debuts ChatGPT Enterprise — 4 times the power of consumer version.

Crypto

• Singapore family office Whampoa Group recruited Ali Moosa from JPMorgan to help oversee a new crypto-friendly bank in Bahrain

• SEC Issues First Enforcement Action Targeting NFTs.

• Solana-Based Automation Startup Clockwork to Shut Down.

• Robinhood Revealed to Be Third-Largest Bitcoin Holder With $3B in BTC.

• Friend.tech threatens to punish users if they use copycat apps.

• US House Financial Services members scold Fed’s Powell for stablecoin bill obstruction.

• Binance adds fiat currency restrictions for Russian users.

• Coinbase says it's investigating as some Wallet users see empty balances

• Binance taps Polish arm to continue serving Belgian users

• South Korean Crypto Exchanges Required to Prepare at Least $2.26M in Reserves

• Binance's Bitcoin Lightening Network Capacity Grows at Lightning Speed

• MakerDAO Face $1.84M Loan Default from a RWA Borrower

• Layer2 Network Shibarium Goes Live Again

Deal Flow

• Oman Announced $800M Investment in Crypto Mining

Yours sincerely,
Treehouse Research 🌳