🌳 US Jobless Claims Rises To The Highest Level Since Nov 2021; Prime Trust Found To Be Insolvent By Nevada Regulators

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• U.S. unemployment aid applications reached their highest level since Nov 2021; US. and India deepen strategic partnership (more in Macro & TradFi)
• Prime Trust was found to be insolvent by Nevada regulators; Three Arrows Capital Co-Founders are back with a new VC fund (more in DeFi & CeFi)
• Tron Founder Justin Sun unstakes $30M ETH from Lido, transfers to Huobi; most Bitcoin whale transactions in 3 months (more in On-Chain)
• Crypto options show cooling term structure as volatility falls (more in Crypto Derivatives)
• BTC's price stalls at crucial $30K level; ETH surges beyond $1.9K mark before pulling back (more in Crypto Technical Analysis)

Macro & TradFi

In the United States, new filings for unemployment aid have reached their highest levels since Nov 2021, surpassing economists' estimates. According to the latest release by the US Labor Department on Thursday, the weekly initial jobless claims, after adjusting for seasonal variations, remained unchanged at 264,000 for the week ending on 17 June. This data deviated from economists' predictions, as the claims exceeded the forecast of 260,000 new applications collected in a Reuters survey. The upward trend in jobless claims, following a historic low of under 200,000 last fall, suggests a potential weakening in the otherwise strong US labor market conditions.

During a recent state visit to the White House, Indian Prime Minister Narendra Modi and US President Joe Biden announced significant defense and technology agreements, highlighting the deepening strategic relationship between the two nations. The agreements included India's procurement of American-made spy drones and the establishment of a $2.75B semiconductor assembly and test facility in India by US-based Micron. Additionally, the leaders agreed to enhance collaboration in space exploration and the joint production of fighter jet engines in India by General Electric. These partnerships reflect Washington's strategy of intensifying engagement with India as a counterbalance to China's influence and signify India's shift towards the US amidst escalating border tensions with China.

On Thursday, US stock markets showed a mixed response, tech stocks rallied after being hit earlier in the week due to concerns over potential further interest rate hikes, while the Dow Jones dipped slightly by 0.01%. The Nasdaq Composite, which hosts a plethora of tech stocks, saw a robust recovery, increasing by 0.95%. Big tech companies rebounded notably, with Amazon surging by 4.26%, Apple gaining 1.65%, and Microsoft rising by 1.84%. The S&P 500, which also houses many tech firms, also improved by 0.37%. On the currency front, the sterling demonstrated weakness despite the Bank of England's unexpected interest rate increase from 4.5% to 5%. Instead of strengthening as anticipated, the move resulted in a 0.3% decline against the dollar, trading at $1.273 in the late afternoon. This indicates investor concerns regarding the potential negative impact of the rate rise on economic growth.

DeFi & CeFi

• Nevada regulator says Prime Trust can’t meet client withdrawals
• Coinbase CEO Brian Armstrong thinks 2024 US election is crucial for crypto industry
• Mastercard boosts its engage program to prioritize crypto integration
• Solana crypto lending platform Jet pivots to fixed-rate lending
• 3AC co-founders launched a new VC fund named 3AC Venture
• Santander, Crédit Agricole asset arm, receives French crypto custody license

Prime Trust, a crypto custody firm, is facing significant financial challenges, as confirmed by the Nevada Department of Business and Industry. The regulator has ordered Prime Trust to halt activities, citing the company's deteriorating financial condition and potential insolvency. Prime Trust was unable to fulfill customer withdrawal requests due to a shortfall in customer funds and a significant liability on its balance sheet with a negative $12M stockholders' equity position. BitGo recently announced the termination of its potential acquisition of Prime Trust, and other companies have reported that Prime Trust has stopped accepting fiat deposits in response to the order. Prime Trust has the option to request a hearing within 30 days, but if it does not, the cease-and-desist order will become final.

In other news, the same individuals who were involved with the now-defunct hedge fund Three Arrows Capital (3AC) have launched a new venture capital fund called 3AC Ventures. The primary goal of this fund is to drive innovation and promote wider adoption of cryptocurrencies. However, due to the bankruptcy and leveraged trading issues associated with 3AC in the past, there is understandable skepticism surrounding this new venture. Some industry players believe that 3AC Ventures could still deliver positive outcomes if they can demonstrate a shift in strategy and a strong commitment to transparency, responsible management, and delivering on their promises. It's worth noting that the founders have also recently introduced Open Exchange (OPNX), a trading platform that specializes in claims against bankrupt cryptocurrency entities.

On-Chain

Justin Sun, the founder of Tron network, recently unstaked $29.7 million worth of ETH from Lido Finance and transferred the tokens to crypto exchange Huobi, suggesting a potential intention to sell. Blockchain data reveals that Sun's wallets still hold $543 million worth of Lido's stETH token after the withdrawal. In another transaction, Sun deposited 1,000 BTC to Huobi when the price of Bitcoin broke the $30,000 level. According to Arkham Intelligence, Sun's labeled crypto wallets still hold digital assets worth $1.2 billion, with the remaining wallets still holding 287,855 stETH tokens.

Bitcoin's price crossing the $30,000 mark has triggered a bullish recovery and a notable increase in large transactions. Within two hours of reaching $30,626, there were 259 transactions worth over $1 million, representing the highest hourly volume of whale transactions in over three months. Santiment's analysis indicates that sustained growth in the market would require further increases in transaction volume. This surge in whale activity reflects renewed investor interest and suggests growing confidence in Bitcoin's upward momentum.

Crypto Derivatives

• Funding rates for BTC and ETH remain positive.
• The Deribit Implied Volatility Index (DVOL) for BTC and ETH fell to 51.1% and 47.61% respectively.
• The 30-day 25-delta skew (P-C) for BTC and ETH remains negatively skewed at -3.95% and -8.1% respectively, favoring call options.

Top 3 CEX USDT perp funding rate arbitrage based on last 24-hour lookback:

In the past 24 hours, the crypto market witnessed liquidations totaling $118.18M, with long positions comprising a significant 58.9% of the overall liquidated positions.

The term structure for BTC and ETH has cooled off across various tenors, returning to the normal contango state after the previous backwardation where shorter-dated options exhibited higher IV. IV for at-the-money (ATM) options expiring within a week remains elevated, as traders actively push it above 50% volatility for BTC and 45% for ETH. Shorter-term options aim to capitalize on the higher deltas and increased sensitivity to price movements. Overall, the term structures continue to exhibit elevated levels.

The options skew (P-C) for both BTC and ETH has transitioned from a deeply negative stance to a more neutral position. The market continued to have a stronger preference for call options, reflecting their positive short-term market sentiment and willingness to pay higher premiums for calls. It also suggests their anticipation of further positive price movements in the upcoming week for both major cryptocurrencies.

The positive volatility risk premium (VRP) for both BTC and ETH has reverted closer to the mean, potentially due to market participants realizing their strikes and reducing their exposure. Looking at notable trade structures reported by @paradigm, option skews have started to move back toward equilibrium, although they still lean in favor of call options. Upside positions continue to drive options flow. Notable BTC structures on Paradigm include the purchase of 500x 28 Jul 23 $28K / $32K (tied) Bull Risk Reversal, as well as the sale of 500x 28 Jul 23 $36K - 0.17 Perpetual $30.2K Call spread. In the ETH market, noteworthy structures include the purchase of 500x 30 Jun 23 $2K Call and the sale of 250x 28 Jul 23 $1.7K/$2.2K Strangle.

The VIX declined to 12.91%, reaching a 52-week low of 12.73% during US trading hours last night.

Crypto Technical Analysis

Shifting our focus to technical analysis, BTC is presently striving to establish itself above the 30K mark following a notable upward surge from its weekly opening, resulting in gains of approximately 14% for the week. BTC is observed to be trading within a narrow range spanning from 29K to 31K, with 30K serving as the current midpoint. On the 4-hour chart, it appears that BTC’s price action is currently stalling around the 30K level and showing signs of a reversal. There are two potential outcomes that could unfold: firstly, BTC may rebound from the 30K level and advance towards 31K, or alternatively, it could decline and test the 29K mark as a potential support level.

Elsewhere, ETH has been met with resistance around the middle range on the daily chart following a significant upward movement from its lower range lows of 1.65K. One possible scenario that may unfold is ETH retracing towards the lower quarter level of the range at 1.79K before resuming its upward momentum to surpass the middle range of around 1.9K. Furthermore, an intriguing observation on the 4-hour chart reveals that ETH encountered a delayed surge, with the token gaining an additional 2.7% at the same time when BTC reached its peak during this rally.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Read Past Issues

Daily Readings

TradFi

• Fed's Bowman says more rate increases needed

• Japan's inflation stays above BOJ target, key gauge hits 42-year high

• Zambia seals $6.3 billion debt restructuring deal

• China's Sinochem expected to keep Pirelli stake despite Italy's curbs

• US-based generative AI job postings up 20% in May, Indeed data show

• Tunisia tells IMF conditions for financial support risk unrest

• World Bank should add disaster clauses to debt agreements, Yellen says

• U.S. jobless claims hold steady at 20-month high, current account gap widens

• Indian central-bank members diverge on further rate hikes as growth risks emerge

• Labour scarcity could sustain euro zone inflation: ECB's Nagel

• Bank of England hikes rates to 5% in surprise move

• Turkish central bank says prepared to gradually tighten policy more

Crypto

• Tron Founder Justin Sun Unstakes $30M of Ether from Lido, Sends Tokens to Huobi.

• Banning crypto ‘may not be effective in the long run’ — IMF.

• OPNX Files Defamation Lawsuit Against Mike Dudas, Issues Justice Tokens.

• BlackRock Executive: Knowing Who Counterparties Are Is Key to Engaging Institutions in DeFi.

• Solana-Based Crypto Lending Platform Jet Pivots to Fixed-Rate Term Lending.

• Startup Kaito Gets $87.5M Valuation in New Funding to Build AI Search Engine for Crypto.

• Algorand Cuts Block Time After New Upgrade.

• Crypto Friendly Xapo Bank Expands to India, Rest of South Asia.

• Animoca Brands' Anichess Secures $1.5M for Decentralized Chess Game.

• QCP Capital, SBI Alpha Execute First Uncleared Crypto Options Trade on Regulated Platform Using Bitcoin as Collateral.

• South Korean Crypto Yield Firm Haru Invest Fires More Than 100 Employees: Report.

• Mastercard Focuses Its ‘Engage’ Program on Crypto.

• Binance faces scrutiny in Brazil, exec summoned to testify before Congress.

• Offchain Labs unveils tool to build Layer 3 'Orbit' chains on Arbitrum

Deal Flow

• Wintermute Backs DEX Vertex Protocol in Strategic Investment.

• Robinhood buys credit card fintech X1 for $95M.

• BitGo terminates acquisition of Prime Trust.

Yours sincerely,
Treehouse Research 🌳