🌳 U.S. Labor Market Cools; Matrixport Founder Addresses Bitcoin ETF Speculation and Market Dynamics

04 Jan 2024, Thursday

3:12 AM

🌳 U.S. Labor Market Cools; Matrixport Founder Addresses Bitcoin ETF Speculation and Market Dynamics

BTC

ETH

S&P Futures 500

$42,879.50

$2,211.00

$4,752.50

(-5.04%)

 (-6.40%)

(-0.72%)

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


GM Treehouser 🌳

Welcome to our Treehouse Daily newsletter, where Treehouse brings you financial news and insights free daily! We believe you’ll find this helpful.

Also, in case you have missed it, check out our latest research piece 👇

You can also access our research articles on the Bloomberg Terminal with the command “NH TRH < GO >"!


Our Daily View

What We Are Covering Today

  • U.S. job openings decline for the third month; Apple's stock downgraded by Barclays (More in Macro & TradFi)
  • Matrixport report affects Bitcoin price; Goldman Sachs eyes a role in Bitcoin ETFs (More in DeFi & CeFi)
  • BTC trading surges amid volatility; KyberNetwork faces $ARB exploitation threat (More in On-Chain)
  • BTC IV saw a significant spike following the Matrixport analyst report; BTC shows an increasingly bullish sentiment while ETH flips to a short-term put premium (More in Crypto Derivatives)
  • Bitcoin temporarily broke the support level but has quickly rebounded back to the channel range; ETH moves into a sideway accumulation zone from the previously bullish trendline  (More in Crypto Technical Analysis)

Macro & TradFi

In November of 2023, U.S. job openings decreased moderately, marking the third consecutive month of decline, as reported in the Labor Department's Job Openings and Labor Turnover Survey (JOLTS). Job openings dropped by 62,000 to 8.790 million, slightly below economists' expectations, and down from the record high of 12 million in March 2022. This decline reflects a gradual cooling of the labor market, influenced by the Federal Reserve's significant interest rate hikes since March 2022. Despite these measures, the unemployment rate has remained below 4%, and the labor market's resilience continues to prevent a recession. Forecasts for December indicate a continued, albeit slower, job growth, with an anticipated slight uptick in the unemployment rate.

Elsewhere, Barclays has downgraded Apple's stock to 'underweight', the first such rating since 2019, amid concerns over diminishing iPhone demand. This decision by analysts led by Tim Long, who also reduced the price target from $161 to $160, anticipates a 17% decline in Apple's stock value over the next year. The downgrade follows a period of underwhelming quarterly performances and a lack of compelling new features in the upcoming iPhone models. Despite Apple's stock rising approximately 50% last year and reaching a market value of $3 trillion, analysts express skepticism about its ability to sustain these gains in the face of increasing competition and regulatory challenges, especially from companies like Huawei and in markets like China. Currently, Apple holds five 'sell' or equivalent ratings against 34 'buys' and 14 'holds', with a consensus price target suggesting only a 3.6% return over the next year.

In yesterday's trading session, U.S. equity markets witnessed a continued downturn, extending their slump for a third consecutive day. The Dow Jones Industrial Average fell by 0.76%, while the Nasdaq Composite and S&P 500 experienced declines of 0.80% and 1.06%, respectively. This downward trend in the markets, particularly impacting technology stocks, comes in the wake of the Federal Reserve's latest meeting minutes. Alphabet stood out as the only company among the 'Magnificent 7' tech giants to avoid losses, gaining 0.57%. In contrast, Apple saw a 0.75% drop following reports of its decreased share in the global smartphone market as of November. Investors are now turning their attention to the upcoming ADP Nonfarm Employment Change report, scheduled for release on Thursday at 21:15 SGT. Additionally, significant focus will be on the average hourly earnings, unemployment rate, and Nonfarm payroll data, set to be released this Friday, January 5, at 21:30 SGT.

DeFi & CeFi

  • Matrixport spreads FUD in a skeptical report of BTC ETFs
  • Goldman Sachs considers involvement in Bitcoin ETF through collaborations with BlackRock and Grayscale
  • Radiant Capital loses $4.5M in exploit
  • Unisat's BRC-20 upgrade faces opposition from BRC20 creator
  • BendDAO launches BRC-20 token BDIN, set to launch BRC-20 cross-chain and lending

Jihan Wu, founder of Bitdeer and Matrixport, clarified that the broad circulation of a report by Matrixport analysts, which speculated on the non-approval of a Bitcoin ETF in January, was unexpected and uncontrollable by the firm. This report coincided with a significant drop in Bitcoin's price on January 3rd. Matrixport's analysts attributed the potential ETF rejection to the Democrat-dominated SEC leadership and Chair Gensler's cautious stance on crypto. Despite the market's reaction, Wu emphasized the independence of Matrixport's analysts and downplayed the report's impact on Bitcoin's price fluctuations, attributing them to other market dynamics. He remains confident about the eventual SEC approval of a Bitcoin Spot ETF, viewing the current volatility as inconsequential in the long term.

Goldman Sachs is reportedly in discussions to become an "authorized participant" (AP) for the Bitcoin ETFs proposed by BlackRock and Grayscale, pending SEC approval. This crucial role in the ETF industry involves the creation and redemption of ETF shares to align with their underlying assets. Goldman Sachs' involvement would place them alongside other financial heavyweights like JPMorgan Chase, Jane Street, and Cantor Fitzgerald, who are also assuming the AP role for various Bitcoin ETFs in the U.S. The move signifies a shift for major U.S. banks, traditionally hesitant about direct cryptocurrency dealings, as they now engage in the burgeoning Bitcoin ETF market. This engagement is facilitated by a cash-based mechanism for managing the Bitcoin backing the shares, a strategy deemed essential for SEC approval. BlackRock, the world's largest asset manager, and Grayscale, with its $26 billion Grayscale Bitcoin Trust, are significant entities in this initiative. Grayscale aims to transform its trust into a more liquid ETF and has already designated market-makers for this transition. Goldman Sachs, BlackRock, and Grayscale have not made official comments on these developments.

On-Chain

Moving on to on-chain, BTCs has witnessed a significant decline, marked by a notable temporary drop below $42K on many CEXs. Santiment’s analysis indicates that this downward trend has catalyzed a substantial increase in BTC trading volume, reaching its highest level since March 17th. Given the current trajectory, it's plausible that today's trading volume may surpass the peak levels observed earlier last year which indicates a heightened trader response to market movements.

Elsewhere, the KyberNetwork exploiter capitalized on the recent surge in $ARB value, according to Spotonchain. Over the past three days, they sold 1.70 million $ARB, valued at $2.86 million, in exchange for 1,221.8 ETH at an average rate of $1.68. Currently, the exploiter retains 687,000 $ARB, equivalent to $1.32 million, indicating a potential for further sales of $ARB. This incident underscores the vulnerability of digital asset platforms to exploitation, especially during periods of market volatility, and highlights that funds that are lost to such attacks may not be recovered.


Crypto Derivatives

  • Funding rates remained positive for BTC and ETH. 
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained relatively stable at 65.20% and 68.66% respectively despite the heightened volatility last night.
  • The futures market witnessed $685.43M liquidations, with longs representing 86.29%.
  • The 30-day 25-delta skew (C-P) for BTC increased significantly to 3.75% while that of ETH decreased to 1.06%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

31.39%

AVAX

OKX

Bybit

21.92%

BNB

Binance

Bybit

20.71%

ADA

OKX

Bybit

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.


The implied volatility (IV) for Bitcoin (BTC) in the short-term 7-day periods has experienced a significant spike, propelled by Matrixport's analyst predicting an outright rejection of all BTC ETFs in January, inducing a market-wide panic. Presently, the 7-day IV stands at 71.27, reflecting a noteworthy 12.5% surge in the last 24 hours. In contrast, the 30-day IV has remained relatively stable.

The term structure has witnessed an increase in implied volatilities (IVs) across various tenors. Notably, the IVs for 8-day expiry contracts, closest to the ETF approval deadline, have surged by 5.6%. This uptick signals the market uncertainties arising from yesterday's events, leading option traders to anticipate higher volatility associated with the news surrounding the decision on ETF applications in the near future. Moreover, further-dated IVs have also experienced a slight increase, suggesting that yesterday's news may have influenced traders' long-term perspectives on BTC as well.

Despite experiencing a significant dip following the news, both the BTC 25-delta 30-day and 7-day call-put skew have swiftly rebounded to a similar level. Consequently, the current landscape continues to lean towards a notable call premium, signifying a bullish sentiment among options traders.

In contrast, ETH is exhibiting the opposite pattern, with both the 7-day and 30-day skew experiencing a decline in the last few days. Presently, the 7-day skew has transitioned into a put premium and is trading near the lowest level in the last 30 days. This divergence in options between ETH and BTC indicates a market trend towards a bullish outlook for BTC while concurrently hedging against ETH. This may suggest an anticipation of selling pressure on ETH as individuals potentially shift their ETH positions to BTC if the ETF is approved.

According to the report by @Paradigm, yesterday's Asia/Europe trading session was marked by high volatilities, with BTC experiencing a temporary retracement below $42K. Consequently, the flows predominantly focused on the front end, influencing the At-The-Money (ATM) Implied Volatilities (IVs) as previously described. Notable trades during this session included the acquisition of a 325x 19-Jan-24 $42,000 BTC Put, 200x 26-Jan-24 42,000 BTC Put, the selling of 6,000x 29-Mar-24 2,800 / 28-Jun-24 3,000 ETH Call Calendar, and 6,000x 29-Mar-24 2,500 / 28-Jun-24 2,500 ETH Call Calendar.

Crypto Technical Analysis

Moving to technical analysis, Bitcoin encountered a flash crash yesterday in response to the Matrixport analyst report suggesting a potential rejection of all Bitcoin Spot ETFs by the SEC in January. On major centralized exchanges, the price briefly dipped below $42K, breaching the previously identified supporting trendline. However, this movement was short-lived, and the price swiftly rebounded above. Presently, BTC is oscillating between the boundaries of the rising channel. If the bullish momentum regains strength, the price is likely to move towards the $45.5K resistance level, characterized by the channel's upper boundary and the resistance observed since early 2022. Conversely, in the event of negative developments related to ETF applications, the price may experience a decline, breaking through the channel. In such scenarios, the initial support zone might test $40.7K before potentially reaching the $39.5K level, identified by the lower trendline formed by local higher lows.

In contrast, the price action for ETH on the 4-hour chart yesterday invalidated the bullish trendline that had been observed since late October. Similar to BTC, ETH experienced a rapid decline. From a technical perspective, this transformation has turned the price chart into a horizontal channel, suggesting a phase of sideways accumulation. Consequently, the channel's lower and upper boundaries now function as the immediate effective support and resistance zones, situated at $2.15K and $2.41K, respectively.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

Crypto

Deal Flow

Yours sincerely,
Treehouse Research 🌳