🌳US Inflation Rises Amid Oil Pressure; Delaware Court Greenlights Limited FTX Asset Sales

14 Sep 2023, Thursday

2:31 AM

🌳US Inflation Rises Amid Oil Pressure; Delaware Court Greenlights Limited FTX Asset Sales

BTC

ETH

S&P Futures 500

$26,472.50

$1,634.50

$4478.25

(+2.08%)

 (+2.32%)

(+0.31%)

Note: All percentages shown above are referenced to the previous business work day's 09:00 (GMT+8)

GM Treehouser 🌳

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August 2023 Market Recap

Our Daily View

What We Are Covering Today

  • US inflation rises amid energy costs; UK's GDP contracts, sparking recession concerns (more in Macro & TradFi)
  • Court approves sale of FTX digital assets; MetaComp offers stablecoin-to-TradFi path in Singapore (more in DeFi & CeFi)
  • Short Term Holder NUPL hits yearly low at -0.113 as traders capitulate amid price decline; DeFi TVL reaches 2-Year low of $20.5B (more in On-Chain)
  • Options market volatility remains stable; term structures reflect BTC's consistent spot prices post-rally (more in Crypto Derivatives)
  • Both BTC and ETH attempt to find acceptance above their respective descending trendlines (Crypto Technical Analysis)

Macro & TradFi

US inflation surpassed expectations in August, registering a 3.7% annual rise largely driven by escalating petrol prices, as global players like Saudi Arabia and Russia aim for a $100 per barrel oil benchmark. Despite the anticipated short-term fluctuations in energy prices, the Federal Reserve's anticipated stance remains unmoved, especially given the core inflation's continued year-on-year decline. Financial markets reflected a muted reaction; however, with an impending Federal Reserve meeting on September 19-20, the investment community remains divided on potential rate adjustments later this year. This surge in inflation underscores the delicate equilibrium policymakers must maintain between controlling inflation and ensuring economic growth.

In other news, in July, the U.K.'s GDP unexpectedly contracted by 0.5%, primarily driven by a 0.5% decline in services output, marking the most significant economic shrinkage since December. This contraction, amid a heightened interest rate environment, correlates with the uptick in U.K. mortgage arrears and has prompted major institutions like Goldman Sachs and JPMorgan to cut their growth projections for the region. Analysts, including those from ING and Capital Economics, point towards the potential of a looming mild recession, attributing some of the economic sluggishness to specific factors like strikes and adverse weather. Despite these concerns, robust wage growth – underscored by a 7.8% annual increase in pay excluding bonuses – might incentivize the Bank of England to implement a final rate hike, pushing it from 5.25% to 5.50%.

U.S. equities displayed mixed reactions on Wednesday in light of a higher-than-anticipated inflation report; while the DJIA declined by 0.20%, the S&P 500 and NASDAQ rose by 0.12% and 0.29%, respectively. Although traders initially divested from short-term U.S. debt, a notable shift drove the yield of the two-year U.S. Treasuries down by 0.03 percentage points to 4.98%. Despite this inflationary surge, market sentiment suggests the Fed will maintain current interest rates in the upcoming policy meeting.

DeFi & CeFi

  • Court approves sale of FTX digital assets
  • MetaComp offers stablecoin-to-TradFi path in Singapore
  • North Korean attackers linked to $54M CoinEX hack
  • EU parliament overwhelmingly supports DAC8 crypto tax reporting rule
  • Binance names Rachel Conlan as Chief Marketing Officer
  • Telegram integrates TON’s crypto wallet TON Space

The Delaware Bankruptcy Court has approved the sale of FTX’s digital assets excluding Bitcoin, Ether, and “certain insider-affiliated tokens”, in weekly batches through an investment adviser. Initial sales limits are set at $50M for the first week and $100M in subsequent weeks, subject to increment upon approval from the creditors’ committee, ad hoc committee, or the court. Sales information will be confidential with a publicly accessible redacted version. The sales can be delayed if the committees or the U.S. trustee raises objections. FTX can hedge, stake, and use the assets with prior approval from the committees. However, the sale of FTX Token (FTT) will require further court authorization. According to a recent update, FTX has $833M worth of Bitcoin and Ether; observers noted that the sales represent a small portion of trading volume and may not have a heavy impact.

In other news, MetaComp, a digital asset platform, is offering Singaporean clients the ability to purchase traditional securities like money market funds and U.S. Treasury bills using stablecoins, which it converts to fiat currency. MetaComp and its parent company, MetaVerse Green Exchange, hold three distinguished licenses from the Monetary Authority of Singapore, enabling them to offer this service. They are allegedly the first in Singapore to offer such services, with the only other authorized entity being DBS Bank. MetaComp has accepted stablecoins such as Tether (USDT) and USD Coin (USDC) from up to 10 institutional and accredited investors, totaling $50M in trading volume since the service launched last month across Asia. MetaComp believes that stablecoins have broader applications in the financial market, and is building its business accordingly.

On-Chain

Shifting our attention to on-chain, the Percentage of Addresses in Profit for BTC has recently dipped to its lowest point in seven months, registering at 58.54%. The last time such a figure was observed was during the regional banking crisis of March 2023, which stood at 58.95%. Additionally, the Short-Term Holder Net Unrealized Profit/Loss (NUPL) has reached its lowest point for the year at -0.113, indicating capitulation among short-term traders. This implies that recent price movements have had a detrimental effect on these positions, particularly shorter-term traders.

Meanwhile, the Total Value Locked (TVL) for DeFi on Ethereum has recently hit its lowest point in two years, standing at $20.5B. Back in April of this year, TVL had peaked at $31.4B before steadily declining, shedding over $10B in TVL over the span of several months. This decline is partially linked to the decrease in asset values and multiple bearish events that led to the outflow of capital from the DeFi sector.

Crypto Derivatives

  • Funding rate is positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC rose to 44.15%, while it maintained at 39.25% for ETH.
  • 30-day 25-delta skew (C-P) rose on both BTC and ETH to 0.27% and 0.2%, respectively.
  • The futures market witnessed $65.84M worth of liquidations in the last 24 hours, with shorts representing 69.74% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

38.06%

SOL

dYdX

Bybit

16.62%

ETH

dYdX

Binance

9.49%

DOGE

dYdX

Binance

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.

For the options market, implied volatility remained relatively stable as spot prices recovered following its slump on Monday. The options market appears unreactive to the Fed interest rate decision next week.

Term structure remains in contango, with all tenors remaining largely unchanged. This reflects stable spot prices at 26K since the rally earlier this week.

Elsewhere, the 30-day (call-put) skew on BTC rose to 0.27% as spot prices rallied above the $26K handle. This marks the third consecutive day of rise in skew for BTC, possibly caused by the CPI report reflecting a slight energy price-induced increase in inflation.

Lastly, @Paradigm observed varied options trading activity. Prominent BTC transactions featured a 100x 29-Dec-23 $33K call acquisition. On the ETH side, significant trades encompassed a 4,000x 29-Sep-23 $1.6K/$1.7K call spread (tied) purchase and a 3,000x 22-Sep-23 $1.6K/$1.7K call spread acquisition.

Crypto Technical Analysis

Transitioning to technical analysis, BTC experienced mild price swings between the $25.8K and $26.4K levels following a strong rally from its support at $25K on Tuesday. At present, BTC is making an effort to breach the descending trendline observed on the 4-hour chart. If BTC manages to surpass the trendline and find acceptance above it, the next key resistance level to look out for is $28.5K. The $28.5K handle holds significance as it was the start of its recent meltdown, resulting in over a 10% loss in just a few trading sessions.

Conversely, ETH experienced a rejection from the $1.58K support level and is currently retesting the descending trendline. In a similar vein, if ETH manages to establish stability above this trendline, it could possibly adopt a bullish trajectory, with the next significant resistance point situated at $1.8K. Zooming out for a broader perspective on the daily chart, both $1.58K and $1.8K mark key levels within its long-term trading range, signifying the midpoint and the quarter-point, respectively. Additionally, ETH is presently finding support at its range midpoint ($1.58K), which is a good note for bullish participants, given the notable strength it has demonstrated above this handle.

Access institutional-grade commentary on TradFi × Crypto markets

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Treehouse Research 🌳