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
- US Banks raise dividends amid credit crunch concerns and passing Fed stress test (more in Macro & TradFi)
- Ethereum community introduces ERC-7625 circuit breaker; 1inch sells 11,000 of $ETH to test Fusion Mode (more in DeFi & CeFi)
- LTC millionaire addresses increases ahead of the Halving event; Total exchange BTC balance dropped to the lowest level since 2019 (more in On-Chain)
- Negative Put-Call skew in BTC trade structures; increased buying of call structures (more in Crypto Derivatives)
- BTC and ETH show bearish momentum; ETHBTC at major support (more in Crypto Technical Analysis)
Macro & TradFi
The U.S. Federal Reserve, as revealed in the minutes of its June policy meeting, decided to maintain interest rates at their current level, buying time to assess the need for further rate hikes. While most participants expected eventual tightening of policy, they agreed to keep the federal funds rate between 5% and 5.25%. The minutes revealed that some policymakers favored an increase due to resilience in inflation and economic activity. The interest-rate futures markets are pricing in a 88% chance that the Fed would raise rates to a range between 5.25% and 5.5% this month, reaching a 22-year high. Additionally, consumer prices and spending in May grew slower than anticipated, with the Fed's preferred inflation measure, the personal consumption expenditures price index, showing its slowest pace in two years.
The recent bank failures have raised concerns about a tighter credit crunch, making the Fed less certain about the appropriate level of rate increases. In contrast, Bank of America (BofA) announced plans to raise its dividend by 9% following a successful stress test conducted by the Fed. BofA's quarterly common stock dividend will increase from 22 cents to 24 cents per share starting in the third quarter of 2023. Other major banks, including JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley, also raised their dividends after passing the Federal Reserve's stress test, demonstrating their capital strength in withstanding severe economic downturns.
On Wednesday, major stock indexes experienced declines following reports of slower-than-expected expansion in China's services sector and the release of the Fed's meeting minutes. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all finished lower, with the Dow industrials losing 0.4% and ending a three-day winning streak. Treasury bonds, on the other hand, saw gains, causing the yield on the 10-year Treasury note to rise to 3.943% from Monday's close of 3.856%.
DeFi & CeFi
- Ethereum community proposes ERC-7265 to protect DeFi protocols from exploits
- 1inch sold 11,000 of $ETH to test Fusion Mode
- BlackRock CEO Larry Fink compares Bitcoin to Gold
- Pendle Finance expands to BNB Chain
- Singapore’s DBS Bank allows businesses to accept payment in e-CNY
- Data intelligence network Web3Go raises $4M in seed round led by Binance Labs
A new standard called ERC 7265 has been proposed by a group of Ethereum community members to enhance the security of decentralized finance (DeFi) protocols. This standard introduces a "circuit breaker" feature that allows DeFi protocols to easily implement a safeguard in their smart contracts. This circuit breaker prevents tokens from leaving the contracts in the event of a hack, providing a means to halt potential attacks. Meir Bank from Fluid Protocol, one of the creators of this standard, explains that ERC 7265 permits teams to establish a circuit breaker with customizable rate limit parameters for each asset. By implementing this standard, when a hack occurs, the attacker will no longer be able to rapidly drain the entire contract, and a significant portion of the funds can be recovered.
In other news, concerns arose within the crypto community when an address linked to 1inch sold approximately 11,000 $ETH at around 1PM UTC on July 5. Co-founder Sergej Kunz confirmed that these transactions were part of a testing phase for the DEX aggregator's Fusion Mode. Kunz explained that the team was testing a new feature that allows the customization of duration and auction amounts, which proves beneficial for asset rebalancing in DAOs, hedge funds, and investment funds. The trade resulted in a better average rate compared to a standard market swap. The Fusion upgrade was introduced by 1inch in December to enhance their swap engine, offering users more cost-efficient transactions and improved security by connecting them to professional market makers.
According to @santiment, there has been a notable rise in Litecoin Millionaire addresses (holding 10,000 or more LTC) as the Halving event approaches in less than four weeks. Over the past five months, there were 32 new addresses holding 10k or more LTC, indicating a 6% increase. This suggests that more capital is flowing into the token as traders aim to capitalize on the anticipated positive sentiment driven by the lower supply inflation resulting from the Halving event.
Amidst ongoing regulatory scrutiny faced by centralized exchanges (CEXs) in various countries, there has been a notable trend of outflows from CEXs to self-custodied wallets. @glassnode's data reveals that exchange balances, measured in BTC, have continued to decline despite recent positive price movements. Specifically, the total exchange balance has dropped to a mere 2.26M BTC, reaching its lowest level since 14 Mar 2019 (1,939 days ago).
- BTC and ETH funding rates remain positive
- Deribit Implied Volatility Index (DVOL) is 45.96% and 44.07% for BTC and ETH respectively
- 30-day 25-delta skew (C-P) for BTC and ETH is at 1.19% and -4.04% respectively
- Over the last 24 hours, the futures market witnessed liquidations totaling $88M, with long positions comprising 79% of the overall liquidated positions.
Top 3 CEX USDT perp funding rate arbitrage based on last 24-hour lookback:
Net Annualized APR
Perp (USDT pair)
Source: @CexyArbBot Telegram
1) Pairs observed include BTC, ETH, SOL, BNB, XRP, LTC, DOGE vs USDT perps
2) CEX observed include Binance, Bybit, OKX & DYDX
@CexyArbBot allows you to customize CEX, 100+ pairs & lookback periods combo
The ATM IV for BTC remains elevated. IV changed little from yesterday; this can be attributed to the stable price levels of BTC and ETH over the past week.
The term structure for both BTC and ETH continues to exhibit contango. Compared to the previous day, there have been minimal changes in the term structure. IV for near term 0 and 1 DTE spiked due to interest in Put buying and Call selling for 7 July expiration. IV for shorter tenors ranging from 2 to 85 DTE decreased slightly.
Looking at the BTC Constant Maturity Skew (P-C) at 25 Delta, the 7-day skew for BTC surged to a positive 3.69%, the 30-day skew also rose but remained negative at -1.08%. This shift in sentiment can be attributed to the sideways movement of the market and a risk-off sentiment, leading from selling pressure in the spot market. Traders are increasingly opting for Put options as a means of managing downside risk and protecting their positions.
The primary trading structures observed by @Paradigm for BTC during today's session included the purchase of 750x 29 Dec 23 $40K Calls, the sale of 300x 29 Dec 23 $20K/$55K-0.22 29 Dec 23 $31.7K Bull Risk Reversals, the purchase of 290x 7 Jul 23 $30K Puts, the acquisition of 189x 25 Aug 23 $32K Straddles, and the purchase of 126x 14 Jul 23 $28K Puts.
Crypto Technical Analysis
After failing to breach the overhead resistance at $31.45K, BTC fell by almost 1% yesterday. Currently, BTC is trading at the middle of last week's trading range, but given its current bearish momentum, a retracement towards the bottom of the range at $29.4K is possible. This is supported by the weakening MACD crossover and the downtrend in the RSI.
ETH also fell by more than 1% yesterday. At the moment, ETH is trading near a minor support level at $1.9K, but it seems that price may break through the support given the bearish momentum. Currently, the MACD is heading below the zero line and the RSI is at 40 and trending downwards, indicating that ETH is likely to head lower to the next support level at $1.83K.
As ETH underperforms BTC, ETHBTC continues its long-term trend downwards and currently sits at a major support level of 0.0625. However, the MACD and RSI provide us with 2 conflicting signals: the MACD indicates bullish divergence (MACD trends higher while price tends lower) and the RSI is gradually trailing downwards. As a result, it is unclear whether ETHBTC will hold at the support level or see a large move to the bottom trendline.
Access institutional-grade commentary on TradFi × Crypto markets
By Treehouse Research
Treehouse Research 🌳