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Our Daily View
What We Are Covering Today
- US Congress passes spending bill to avert government shutdown; Goldman Sachs forecasts a significant acceleration in India's consumption growth (More in Macro & TradFi)
- Trump opposes CBDCs, fearing government control; Frax Finance launches Fraxtal L2 (More in DeFi & CeFi)
- Stablecoin inflows slow, signaling caution; Justin Sun accumulates diverse altcoins amid dip (More in On-Chain)
- BTC term structure shows slight backwardation again while further dated contracts see a decline in IVs (More in Crypto Derivatives)
- BTC breaks key $42K support; ETH testing crucial $2.4K support (More in Crypto Technical Analysis)
Macro & TradFi
On Thursday, the US House of Representatives passed a stopgap spending bill to prevent a partial government shutdown. This move enabled lawmakers to turn their attention to more challenging debates about providing aid to Ukraine. The House's approval followed the Senate's strong endorsement of the bill earlier that day. Next, the bill will be sent to President Joe Biden to sign. It will maintain the existing funding levels for certain federal agencies until March 1 and for others until March 8. The short-term spending bill gives Capitol Hill leaders time to work out a more permanent funding solution built around a $1.66T spending deal reached earlier this month.
In other news, increasing disposable incomes are expected to significantly drive India's consumption, further energizing the nation's consumer sector, which is rapidly emerging as a major force in its economic expansion. Historically dependent on business-to-business services and manufacturing for its growth, India is now transitioning towards a more consumption-oriented economy, according to Abhishek Malhotra, a partner at McKinsey & Company's office in Mumbai. Malhotra mentioned in an interview with CNBC that there's a growing eagerness to spend on travel, jewelry, dining out, and other similar activities in India, reflecting an upward trend in discretionary spending. Around 100 million people in India will earn more than $10,000 a year by 2027, according to Goldman Sachs.
During yesterday’s trading session, a rally in some of the world’s largest technology companies pushed the Nasdaq 100 to an all-time high. The Nasdaq Composite, S&P 500, and Dow Jones Industrial Average increased by 1.35%, 0.88%, and 0.54% respectively. Despite increasing uncertainty about whether the Federal Reserve will reduce interest rates as rapidly as anticipated by market participants, optimism surrounding artificial intelligence has led to a surge in technology stocks. U.S.-listed shares of Taiwan Semiconductor Manufacturing rose 9.41% after projecting a more-than 20% growth in 2024 revenue, on booming demand for high-end chips used in artificial intelligence applications. Advanced Micro Devices surged 1.56% to a record high, NVIDIA rose 1.88%, and Microchip Technology increased 3.38%. Apple's stock rose by 3.26% following an upgrade from "neutral" to "buy" by BofA Global Research. This marks the first rating upgrade for the iPhone manufacturer this year.
CeFi & DeFi
- Donald Trump vows to ‘never allow’ creation of a CBDC in the United States
- JPMorgan CEO, Jamie Dimon, says Bitcoin ‘does nothing’
- Fidelity Ether ETF delayed as more leveraged Bitcoin ETF bids flood in
- Frax Finance to Launch its Layer 2 Fraxtal in February
- China's illegal crypto activities happening in laundromats and cafes: WSJ
- Canada proposes changes to investment fund requirements for crypto
- TrueUSD deploys new reserve audit system
During a recent campaign speech in Portsmouth, New Hampshire, former U.S. President and current presidential candidate Donald Trump firmly opposed the creation of a central bank digital currency (CBDC) in the United States, promising to prevent its establishment. His stance is to protect Americans from what he perceives as government overreach. Trump's declaration garnered significant applause from the audience, underscoring his concerns about the potential for a CBDC to enable government control over individual finances. This statement comes amidst a backdrop of increasing debate over digital currencies in the political arena, where fellow Republican candidate Ron DeSantis has also voiced opposition to CBDCs, and other candidates are integrating cryptocurrency policy into their platforms. Trump's position on CBDCs highlights the growing significance of cryptocurrency and digital finance in U.S. presidential politics.
Meanwhile, Frax Finance, a prominent player in the DeFi sector and the creator of one of the world's largest stablecoins, is set to launch its Layer 2 blockchain, Fraxtal, in early February. According to CEO and founder Sam Kazemian, Fraxtal aims to significantly impact the market, drawing at least several hundred million dollars in crypto assets within its first month. This layer 2 solution, leveraging rollups technology, is designed to enhance transaction efficiency on the Ethereum network by processing transactions off-chain, compressing the data, and then integrating it back into the mainnet. Fraxtal's launch is expected to address Ethereum's congestion issues, which became prominent during the 2021 bull market. The platform will be powered by Frax's liquid staking token, frxETH, which will also serve as the transactional gas for the chain. Kazemian anticipates that Fraxtal's unique features, such as the blockspace incentives program Flox, will position it among the top five chains shortly after launch, reflecting Frax Finance's commitment to expanding and innovating within the crypto ecosystem.
Moving on to on-chain, analysis from Glassnode indicates a noticeable shift in the stablecoin market since October 2023. After experiencing a significant surge, the inflows into stablecoins have decelerated by mid-January 2024, with a day-over-day change peaking at 3% in December 2023 and then tapering to 1.5%. This trend suggests a reduced momentum in capital moving into cryptocurrencies via stablecoins, which may reflect a more cautious sentiment among investors regarding the immediate future of crypto assets. However, the nature of the crypto market's volatility leaves room for rapid changes, and investor interest could rekindle with emerging developments or shifts in the broader financial landscape.
Elsewhere, a wallet associated with Justin Sun, recently withdrew $3.54 million in various altcoins, including LINK, FLOKI, MANA, SHIB, and BAND, from Binance approximately 14 hours ago, according to Spotonchain. This transaction follows a previous withdrawal by Sun on December 19, 2023, where he moved 500 billion SHIB tokens, valued at $5.22 million at the time, from Binance to a different address. These actions indicate that Sun is strategically accumulating a diverse range of altcoins during the current period marked by falling prices in the altcoin market. This accumulation could suggest confidence in the future potential of these assets.
- Funding rates remained positive for BTC and ETH.
- Deribit Implied Volatility Index (DVOL) for BTC and ETH dropped to 47.62% and 47.54%, respectively.
- The 30-day 25-delta skew (C-P) for BTC stayed relatively flat at -1.49% while ETH declined to -2.73%.
- The futures market witnessed $222.95M liquidations, with longs representing 87.66%.
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.
BTC’s ATM IV experienced a slight increase after days of continued declines as the market swiftly dropped below its previously anticipated support level. However, on a 24-hour look back, only the 7-day IV increased from 44.59 to 45.45, while the 30-day IV remained relatively flat despite a slight pump throughout last night.
The BTC term structure has similarly demonstrated this change as it returns to a slight backwardation. Specifically, 0-1 day IV has seen a large increase as the market made another large drop in price. Surprisingly, despite the volatility last night, longer-dated contracts have uniformly seen a decline in IV, suggesting investor confidence in the longer term.
The 25-delta call-put skews for both 30-day and 7-day BTC options experienced a minor decline in the last 24 hours. More precisely, the call-put skew witnessed a rapid drop as selling pressure intensified around midnight Singapore Time. However, it swiftly rebounded, indicating a potential overreaction in market sentiment following the selling pressure. This suggests that the bearish sentiment observed yesterday may be short-lived, and the long-term rational view remains somewhat neutral.
Lastly, during yesterday’s US Trading Session, @Paradigm reported a focus on BTC volatility buying as the market drops. Several notable trades included the purchase of 1,000x 23-Feb-24 44K BTC Straddle, 4,204 23-Feb-24 2.8K/3.1K ETH Call Spread, and the selling of 2,750x 29-Mar-24 2.6K ETH Call.
Crypto Technical Analysis
Moving on to today’s technical analysis, BTC has notably breached the support of its recent trading channel as well as the critical $42K level, currently positioned at $41.2K. This represents a substantial 3% decline, potentially setting the stage for further bearish momentum with an eye on the major support zone near $38K. Compounding the negative outlook, BTC has also slipped below the lower boundary of the Bollinger Bands, its dynamic support line, reinforcing the bearish inclination among market participants. The RSI's significant fall to 33.55 underpins this sentiment, edging closer to the oversold territory, which may suggest a heightened potential for a downward trend or a possible upcoming reversal.
ETH has continued its descent, now trading at approximately $2.45K hovering just below a key support-turned-resistance level. The price has edged below the 20-period SMA and is brushing the lower Bollinger Band, potentially indicating a bearish phase that could threaten the $2.4K support zone. This level has significance as it acted as a breakout level during the last uptrend. A confirmed breakdown beneath this level could propel ETH towards the previous vital support of $2.1K. The RSI, currently at 38, has crept closer to oversold territory, down from yesterday's 45, suggesting that selling pressure persists. This aligns with the bearish sentiment that appears to be taking hold in the market.
Access institutional-grade commentary on TradFi × Crypto markets
By Treehouse Research
Treehouse Research 🌳