S&P Futures 500
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
- US labor market shows resilience; China's factory activity faces significant contraction (More in Macro & TradFi)
- SEC nears Bitcoin ETF approvals; Ethereum's 2024 roadmap boosts scalability, security (More in DeFi & CeFi)
- Bitcoin Market Revives with Increased Activity; Major Cyber Heist Exploits Cryptocurrency Volatility (More in On-Chain)
- BTC IVs increased significantly as we approach the January 10th deadline for the BTC Spot ETF application (More in Crypto Derivatives)
- Both BTC and ETH saw a swift rebound from their support zones and now approach their respective key resistances (More in Crypto Technical Analysis)
Macro & TradFi
As 2023 concluded, the US labor market demonstrated resilience with steady hiring and slowing wage increases, indicating ongoing economic expansion and a potential decline in inflation for 2024. December's government data is expected to show a payroll increase of 170K jobs, contributing to the 2.7M jobs added over the year. Furthermore, average hourly earnings are forecasted to have risen by 3.9% from the previous year, marking the smallest annual increase since mid-2021, and the unemployment rate is projected to rise slightly to 3.8%. This moderation in hiring aligns with the Federal Reserve's projections of continued, albeit slower, economic growth and cooling inflation. In a significant move, the Fed signaled a halt to its aggressive interest rate hikes in December, maintaining the benchmark rate at its highest since 2001 and indicating no further increases. Additionally, Fed officials anticipate a 75 basis-point reduction in rates next year. Upcoming data on job openings and December surveys of manufacturing and service activity will provide further insights into the US labor market's trajectory, while international indicators, such as eurozone inflation and China's purchasing managers' surveys, will also be closely monitored.
Elsewhere, China's factory activity experienced a more significant contraction than anticipated, marking the third consecutive month of shrinkage. The official manufacturing purchasing managers index (PMI) dropped to 49, down from 49.4 in November, underscoring the continuous economic strain from weak domestic and international demand. This decline, below the expected 49.6, signals a troubling trend for China's economic recovery, especially as the country enters 2024 with ambitious growth targets. Despite a slight increase in non-manufacturing activity, the overall weak PMI data suggests diminishing growth momentum, prompting speculation about potential central bank rate cuts. The National Bureau of Statistics highlighted the dual challenges of declining overseas orders and insufficient domestic demand, particularly impacting sectors like textiles and non-metal mineral products. This downturn aligns with broader economic issues such as consumer price deflation and a severe property market slump, indicating a cautious outlook for China's economy in the coming year.
Last Friday, US equities experienced a modest decline, with the S&P 500 ending 0.28% below its record high from Jan 2022. The Dow and Nasdaq also fell, by 0.05% and 0.43% respectively. Notably, Fisker surged by 15.9% following a 300% increase in vehicle deliveries from Q3 to Q4 2023 and plans to boost sales in Jan. Conversely, Tesla dropped 1.9% in anticipation of imminent production and delivery reports. Investors' focus is now shifting towards the upcoming release of ISM Manufacturing PMI and JOLTs Job Openings data on 3 Jan, followed by the FOMC Meeting Minutes on 4 Jan. These events are critical as they may influence market sentiment and investment decisions, reflecting the broader economic health and potential policy shifts.
DeFi & CeFi
- Reuter says SEC could inform spot Bitcoin ETF applicants of approval by Jan. 3
- Vitalik publishes detailed roadmap for the new year
- China cracks down on Tether, Hong Kong to introduce licenses for stablecoins
- Tether's strategic BTC withdrawal propels them to 10th largest holder
- Cross-chain Orbit Bridge reportedly suffers $82M exploit
- CZ Denied Permission to Travel by U.S. Judge for the Second Time
According to Reuter, the U.S. Securities and Exchange Commission (SEC) is poised to potentially approve spot Bitcoin ETF applications in the next few days, with applicants possibly receiving notification as early as Jan. 2 or 3. This timing aligns with preparation for a projected launch date of Jan. 10. The decision, which includes an application from Ark/21Shares, could also encompass other pending applications. Numerous asset managers, including BlackRock, VanEck, Valkyrie, Bitwise, Invesco, Fidelity, WisdomTree, Ark Invest, and Grayscale, have submitted amendments in anticipation of this deadline. These firms have been actively engaging with the SEC, including a joint conference call on Dec. 21, to discuss key concerns such as cash creations and redemptions. While initial proposals included in-kind transactions with Bitcoin, recent amendments suggest a shift towards cash models. Approval of these ETFs is significant as they will require holding Bitcoin, thereby potentially increasing demand for the cryptocurrency. Earlier concerns regarding market manipulation have largely been addressed, paving the way for this potentially historic development in cryptocurrency investment vehicles.
Ethereum's 2024 roadmap, released by co-founder Vitalik Buterin, outlines a strategic vision for enhancing the platform's scalability, security, and sustainability. Key initiatives include 'The Surge', which aims to significantly increase transaction processing capabilities to over 100,000 transactions per second through data sharding. This follows the pivotal 'The Merge' in 2022, where Ethereum transitioned from proof-of-work to proof-of-stake consensus mechanism. Additional components like 'The Scourge' and 'The Verge' focus on network security and user experience, respectively. 'The Purge' and 'The Splurge' will streamline the network and explore new technologies, such as zero-knowledge proofs. Buterin emphasizes the importance of aligning with Ethereum's cypherpunk roots, focusing on decentralized applications, privacy, and peer-to-peer communication. This roadmap positions Ethereum to fortify its role in the digital currency landscape.
Moving on to on-chain, a noticeable shift in transfer volume has occurred in the Bitcoin market, as evidenced by significant increases in transaction volumes, fees, and inscriptions according to research by Glassnode. Prior to this period, Bitcoin transactions were relatively dormant, exhibiting minimal activity. However, the market rally in October acted as a catalyst, invigorating the Bitcoin market. This resurgence was marked by a substantial rise in transfer volumes, which escalated from a daily average of $2.4 billion to over $5.0 billion. This level of activity had not been observed since June 2022, indicating a renewed interest and engagement in Bitcoin trading. The increase in transaction volumes suggests a heightened market enthusiasm and investor participation, potentially signaling a positive trend in the cryptocurrency's market dynamics.
Meanwhile, according to analysis by SpotOnChain, the recent cyber heist targeting @Orbit_Chain resulted in a theft of approximately $81.6 million in diverse assets. Following the theft, the perpetrator executed a move by exchanging 30 million $USDT and 230.9 $WBTC for 17,250 $ETH. This transaction, carried out at an average price of $2,301 per $ETH, amounted to a value of $39.7 million. Adding to the severity of this incident, the exploiter has now accrued an additional $1.45 million in unrealized profit, courtesy of a 3.8% increase in the $ETH price over the last 24 hours. This situation highlights the vulnerabilities in digital asset security.
- Funding rates remained positive for BTC and ETH.
- Deribit Implied Volatility Index (DVOL) for BTC and ETH rose significantly to 67.23% and 70.53% respectively.
- The futures market witnessed $136.10M liquidations, with longs representing 63.32%.
- The 30-day 25-delta skew (C-P) for BTC rose slightly to 3.37% while that of ETH dropped to 2.80%.
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.
The implied volatility (IV) for Bitcoin (BTC) has increased in both the 30-day and 7-day periods, with the shorter 7-day IV experiencing a more significant rise. This surge indicates the market's anticipation of increased price fluctuations as the January 10th deadline approaches in the week ahead. Presently, the 7-day IV stands at 69.16, marking the highest level in the last 30 days. This notable increase indirectly reflects the market's enthusiasm and heightened expectations regarding the potential approval of the ETF.
The backwardation observed last week has become notably more pronounced, with contracts featuring short-term expiries now exhibiting an elevated implied volatility (IV) surpassing that of contracts with more extended expiry dates. This underscores the market's anticipation of heightened volatility as the potential approval of a Bitcoin ETF looms in the coming days. Consequently, traders are proactively adjusting their positions in response to these events, showcasing a keen awareness of how regulatory changes could significantly impact Bitcoin's price dynamics.
In the meantime, as it exhibits a modest uptrend, the 25-delta 30-day call-put skew for Bitcoin has largely remained on the sidelines. In contrast, the 7-day skew has experienced a substantial increase, reaching 3.57% and approaching monthly highs. This shift suggests that investors currently have a certain level of confidence in the market's direction over the next 30 days, as opposed to the heightened volatilities anticipated in the week following due to the potential ETF approval.
According to the report by @Paradigm, the previous Asia / Europe trading session on Dec 29 exhibited a notable focus on ETH. The sentiments appeared mixed, with observed flows into both bullish and bearish structures. Notably, the top structures identified during this session included the purchase of a 7200x 29-Mar-24 1900/1700 ETH Put Spread, 5800x 5-Jan-24 2500 ETH Call, and 5250x 29-Mar-24 1900 ETH Put.
Crypto Technical Analysis
Onto technical analysis, the recent abrupt surge in BTC over the last few hours has successfully breached the previously identified triangle pattern. RSI has similarly gone into the overbought territory, currently hovering around 77.5. Consequently, the current price is actively testing the $45K resistance zone, a level that was not only the resistance zone in early 2022 but also a crucial psychological resistance level. However, the potential for a retracement persists, given that the price has yet to confirm a definitive break above the $45K level. In such a scenario, immediate support is anticipated around the $43K mark, situated at the lower boundary of the triangle. If this level fails to hold, further downward movement may ensue, testing the support zone between $40.5K and $40.8K. This range represents the local lows and signifies a nearly 10% downside from the current level.
ETH has mirrored similar movements, bouncing swiftly from the lower trendline formed by the local higher lows following the surge led by BTC. At present, ETH is testing resistance near $2.4K, representing both the local and yearly high. However, akin to BTC, the possibility of a retracement lingers. In such a scenario, the next support is positioned around $2.3K at the same trendline. Notably, ETH is approaching the apex of the triangle formed by the $2.4K resistance and the rising trendline, potentially signaling heightened volatilities in the near future.
Access institutional-grade commentary on TradFi × Crypto markets
By Treehouse Research
Treehouse Research 🌳