🌳U.S. Job Openings Surge in August; SEC's Appeal Against Ripple Rejected, Prompting $XRP Rally

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• U.S. job openings surge unexpectedly; Kevin McCarthy ousted as House Speaker amid dissent (More in Macro & TradFi)
• SEC’s appeal in Ripple case rejected; U.S. claims Chinese firms used crypto in fentanyl network (More in DeFi & CeFi)
• 37M $MATIC transferred today from a Proof-of-Stake (PoS) address; Two addresses jointly sold 1.314T $PEPE tokens for a cumulative 990K $USDC (More in On-Chain)
• 7-day IVs pump as the price of major cryptocurrencies continues to pull back while 30-day metrics remain relatively flat (More in Crypto Derivatives)
• BTC and ETH experience modest pullbacks, rejecting their respective resistance levels and cooling-off from over-bought RSI levels as the broader market settles (More in Crypto Technical Analysis)

Macro & TradFi

In August, U.S. businesses reported an unexpected surge in job openings, totaling 9.61 million, an increase of nearly 700,000 from July and surpassing the Dow Jones estimate of 8.8 million, according to the Labor Department's monthly Job Openings and Labor Turnover Survey. This rise, particularly pronounced in professional and business services with an additional 509,000 positions, underscores a resilient labor market despite the Federal Reserve's economic cooling measures. Concurrently, hires saw a modest increment, reaching 5.857 million, up by 35,000. This data, indicating a robust labor market, influenced stock market dynamics, with the Dow Jones Industrial Average dropping over 260 points.

In other US developments, Kevin McCarthy, the Republican US House Speaker, was ousted from his position by dissidents within the Republican party, marking him as the first US House Speaker to be removed from the role. Despite his efforts earlier in the year to prevent a US debt default and a government shutdown on October 1, McCarthy faced opposition from hardliners within his party who were discontented with his bipartisan approaches. The consequential 216 to 210 vote underscores the ongoing political turbulence in Washington, with Moody’s Investors Service recently expressing concerns about US governance. Representative Patrick McHenry of North Carolina has been appointed as the interim speaker, amidst uncertainties about who will permanently fill the role.

Following robust labor market data reinforcing the case for maintaining elevated interest rates, U.S. equities experienced a downturn. The S&P 500 decreased by 1.37%, the NASDAQ by 1.83%, and the DJIA by 1.29%. The CBOE Volatility Index (VIX), Wall Street's market volatility indicator, surpassed the critical 20 mark, marking its highest level since May. Notably, tech giants Microsoft and Meta saw declines of 2.61% and 1.92%, respectively, while energy stocks, including Valero Energy and Phillips 66, also faced significant drops. Concurrently, the Yen rebounded from its weakest annual position, influenced by rising U.S. treasury yields after the labor data release. Market participants are awaiting the Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings data set for release on 6 October at 20:30 SGT.

DeFi & CeFi

• SEC’s appeal in Ripple case rejected
• U.S. claims Chinese firms used crypto in fentanyl network
• Optimism launches testnet fault-proof system
• EU’s wholesale CBDC plans releasing soon
• Canadian exchange TMX to start Bitcoin futures trading
• Friend.tech users encountered SIM swap attack

A federal judge has rejected the U.S. Securities and Exchange Commission's (SEC) bid to appeal its loss against Ripple. Ripple’s token $XRP saw a 5% rally on this news. District Judge Analisa Torres ruled that the SEC failed to demonstrate controlling legal questions or substantial grounds for differences of opinion. However, the judge set an April 2024 trial date for unresolved issues, allowing the SEC to appeal the case later. The SEC had previously lost a key ruling in July, casting doubt on its ability to regulate cryptocurrencies effectively.

In other news, the U.S. Department of Justice (DOJ) has targeted Chinese businesses and individuals in a crackdown on the production and trafficking of fentanyl, with cryptocurrency payments allegedly playing a role in the peddling network. The U.S. Treasury's Office of Foreign Assets Control (OFAC) also sanctioned several Chinese nationals and identified 16 associated cryptocurrency wallets. Treasury Deputy Secretary Wally Adeyemo attested to the scale at which such trafficking operations are being carried out today, citing a previous crackdown on a Florida network of 28 businesses and individuals involved in producing fentanyl and methamphetamine, as well as the sale of precursor chemicals. Cryptocurrency transactions were similarly used to conceal identities and fund movements in this operation.

On-Chain

According to @santimentfeed, a notable 37M $MATIC was transferred today from a whale’s Proof-of-Stake (PoS) address to a three-year-old dormant wallet, a move that coincided with a slight uptick of 4% in $MATIC's price. This price appreciation of the 13th market cap asset is mild yet significant, as it stands out when the broader crypto market is in a downtrend. This marks the largest transaction on the Polygon Network since July. Such conspicuous movements often signal upcoming volatile market activity, warranting close observation and consideration by market participants.

According to recent on-chain data from @spotonchain, two addresses have jointly sold 1.31T $PEPE tokens for a cumulative 990K $USDC, coinciding with a decline of 4% over the last 24 hours. This substantial offloading of $PEPE tokens at this juncture might indicate that the involved sellers are seeking to minimize exposure or secure liquidity, perhaps anticipating further market contractions for this asset.

Crypto Derivatives

• Funding rates remained positive for both BTC and ETH
• Deribit Implied Volatility Index (DVOL) for BTC ended the day relatively flat at 37.97% while that of ETH is at 36.98%
• 30-day 25-delta skew (C-P) on both BTC and ETH dropped further to -0.90% and -2.57%, respectively
• The futures market witnessed $45.88M worth of liquidations yesterday, with longs representing 70.42% of the total

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

As BTC continues its downward retracement from Monday's surge, the 7-day implied volatility (IV) has experienced a slight uptick, rising from 31.86% to 33.97%. Conversely, the 30-day IV has remained relatively stable, hovering around the 33% mark. This suggests that traders anticipate the heightened volatility as a short-term phenomenon.

Both the term structures of BTC and ETH continue to exhibit a contango state. While the term structure of BTC has undergone negligible changes, ETH's term structure has seen IVs decline for further-dated options. When comparing these two leading cryptocurrencies, ETH is perceived as a safer asset, characterized by lower IVs across the entire curve.

The 30-day 25-delta (C-P) skew for BTC has witnessed a significant decrease in the past 24 hours, as prices continue to decline towards the $27K level. Specifically, BTC's 7-day skew has dropped from -0.86% to -4.96%. In contrast, the 30-day skew has experienced a more modest decline, decreasing by only 2% to -1.43% in the last 24 hours.

As reported by @Paradigm, option flows during yesterday's US trading session were mostly quiet despite the news on the denial of the XRP appeal. Some noteworthy trades included the acquisition of 5452x 29-Dec-23 1400/1000 ETH Put Spread, 2250x 29-Dec-23 2000 ETH Call, and 675x 13-Oct-23 26000/24000 BTC Put Spread.

Crypto Technical Analysis

Moving on to technical analysis, since BTC’s rejection at the $28.9K resistance level, the asset has been trending downwards reflected by another 0.6% fall in the last 24 hours. The RSI remains settled in a neutral zone at 48.54. In a bearish case, the immediate support for BTC sits at $25.6K, but this continued retesting of the previously identified support at $27.5K may indicate a continued bullish sentiment if we can observe a further positive price reversal action from this level.

Next, similar to BTC, ETH has also experienced a 1.8% decline over the past 24 hours, causing it to enter a clear downward trend. If it rebounds after retesting the previous local support at $1.62K, this could signal a sustained bullish sentiment for further positive price movement toward the local resistance at $1.66K. Additionally, with the RSI currently at 39.43, it is approaching oversold territory.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Treasury's Yellen says US overdependent on China for critical supply chains

• House ousts Kevin McCarthy as speaker, a first in U.S. history.

• US new vehicle sales jump in third quarter as UAW strike casts shadow

• US FDA authorizes Novavax's updated COVID shot, shares rise

• S.Korea factory output posts biggest gain in over three years boosted by chips

• US job openings post largest increase in two years; quits rate unchanged

• S&P 500 ends at lowest since June 1 as data fuels rate worries

• Yen surges against dollar, leads some to suspect intervention

• Intel to spin out programmable chip unit, hold IPO; shares rise 2%

• Oil rebounds from 3-week low, settles up despite stronger dollar

• 10-year Treasury yield hits 4.80%, a 16-year high.

• Japan’s property sector sees ‘golden period’ as foreign investments surge 45%.

Crypto

• SEC’s Motion to Appeal Loss in Ripple Case Is Denied.

• Crypto-Friendly Congressman McHenry Temporarily Takes Over U.S. House.

• Chinese Firms Used Crypto Payments to Run Fentanyl Network, U.S. Claims in Charges.

• At Last, Blockchain Developer OP Labs Delivers ‘Fault Proofs’ Missing From Core Design.

• EU Plans for Wholesale CBDC Out Within Weeks, French Central Banker Says.

• Canadian Exchange TMX Soon to Start Bitcoin Futures Trading.

• Friend.Tech Users Targeted by SIM Swap Attack, Several Ether Drained.

• Blockchain Analytics Firm Chainalysis Cuts 15% of Staff.

• Ecosystem developers bring Bitcoin to Cosmos network.

• Binance to shut down BUSD lending by October 25.

• Crypto community tells Elon Musk to dump Satoshi ‘X’ account.

• Chainlink CCIP Application Merlin Bridge Completed Testing on Testnet

Deal Flow

• DWF Labs invests $7.5 million in AirDAO to drive ecosystem growth

• TomoChain Secures An Investment from DWF Labs to Strengthen Web3 Infrastructure Backing

Yours sincerely,
Treehouse Research 🌳