🌳U.S. Mortgage Rates Dip to 7.76%; $600K Loan Costs Soar; SBF Convicted, Faces Decades in Prison

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. mortgage rates slightly dip to 7.76%; Apple dips as revenue disappoints after China’s economic slowdown (More in Macro & TradFi)
• Sam Bankman-Fried guilty on all 7 counts in FTX fraud trial; Coinbase beats Q3 earnings estimates while trading volume falls (More in DeFi & CeFi)
• SOL rallies on breakpoint event and FTX activity; Cardano's market cap and on-chain metrics signal uptrend (More in On-Chain)
• Bitcoin term structure displays mid-term backwardation; BTC option traders hedge amid uncertainty (More in Crypto Derivatives)
• Both BTC and ETH experienced notable price reversals as they approach their respective support zones (More in Crypto Technical Analysis)

Macro & TradFi

The average 30-year fixed mortgage rate in the U.S. has seen a slight decrease to 7.76%, halting a two-month rise but still hovering near a 20-year high. This downtick comes amidst speculation about the Federal Reserve's next moves after they paused rate hikes but hinted at future increases, acting as a cooling effect on the housing market's growth amidst the economic uncertainties. For a $600,000 mortgage, homeowners are now facing monthly payments of around $4,303, $331 more compared to last year and $1,702 more than at the beginning of 2022, reflecting the substantial impact of the rising rates on homeownership costs.

Meanwhile, amid a broad market uplift, Apple shares dipped in response to a forecast suggesting flat sales in the upcoming quarter. Chief Financial Officer Luca Maestri stated that while iPhone revenue is expected to increase, overall sales in the December quarter will remain similar to the previous year. The company's challenges include a slowdown in China, with bans on US technology in some workplaces, competition from Huawei, and fluctuations in sales of Mac and iPad devices. Despite these challenges, the iPhone performed slightly better than expected in the last quarter. Apple is also investing in generative artificial intelligence and has released new iPhone models, while the personal computer market is expected to see a resurgence.

Yesterday, the S&P 500, DJIA, and NASDAQ climbed by 1.9%, 565 points (1.7%), and 1.8%, respectively, signaling strong weekly performance. Tech sector gains were highlighted by Tesla's 6.3% and Nvidia's 2.8% rise. Starbucks posted a 9.5% increase after beating earnings estimates, while Meta and Airbnb saw declines of 0.3% and 3.3%, respectively.

DeFi & CeFi

• Sam Bankman-Fried guilty on all 7 counts in FTX fraud trial
• Coinbase beats Q3 earnings estimates while trading volume falls
• MicroStrategy acquired an additional 155 Bitcoin since end of Q3
• Privacy technology firm Nym plans early 2024 rollout of 'decentralized VPN'
• Bitcoin miner marathon tests BTC mining with methane gas from waste landfill
• PayPal faces subpoena over its PYUSD stablecoin
• Tether extends debt financing to Northern Data capped at $610 million
• ProShares launches first short ether futures ETF for bearish traders
• Treehouse acquires Origins to expand into NFT analytics

Sam Bankman-Fried (SBF), the former CEO of FTX, has been found guilty on all seven charges related to fraud and misappropriation of funds. He could potentially face decades in prison when sentenced on March 28, 2024, with the possibility of up to 115 years. The charges include wire fraud, conspiracy to commit wire fraud, conspiracy to commit securities fraud, conspiracy to commit commodities fraud, and conspiracy to commit money laundering. SBF has been accused of defrauding customers and lenders while leading FTX and Alameda Research, his crypto trading firm. The prosecution alleged that he used customer funds for personal purchases and investments, leading to FTX's collapse. SBF maintained his innocence and may appeal the verdict.

In other news, Coinbase reported a third-quarter adjusted loss of $0.01 per share, beating analyst estimates that expected a loss of $0.55 per share. The crypto exchange also exceeded revenue expectations, reporting total revenue of $674.1M, surpassing analyst estimates of $650.9M. However, total trading volume in the third quarter was $76B, falling short of the estimated $80.1B and down from $92B in the previous quarter. Transaction revenue for the third quarter fell 12% to $288.6M compared to $327M in the previous quarter. The decline in transaction revenue was attributed to decreasing crypto market volatility. As the fourth quarter rolls around, Coinbase has generated $105M of transaction revenue in October alone.

On-Chain

According to @Lookonchain, the notable uptrend in SOL price often peaks around the Solana Breakpoint event before retracing. FTX's recent actions, moving 2.14M SOL for potential sale and maintaining a substantial balance, might also be influencing the market. Despite this, a majority sentiment is bullish on SOL, as evidenced by the Long/Short Ratio of 1.2134 on Binance. Considering the supply dynamics, with a stake ratio of 72.6% and the top 30 holders possessing 16.74% of the total supply, the market showcases a bullish stance in SOL, albeit with caution towards potential sell-off pressure from major holders like FTX.

Meanwhile, @santiment reports a notable trend in Cardano, with the cryptocurrency witnessing a 9% increase in market capitalization in just one day and an impressive 36% over the past two weeks. This surge is backed by a substantial uptick in on-chain activity, with ADA address activity climbing by 23% and whale transactions—the trades of large-scale ADA holders—rising by 32% during the same period. These movements preluded the bullish run, signaling growing investor interest and possibly a continued positive outlook for Cardano's market performance.

Crypto Derivatives

• Funding rates remained positive for BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH rose to 59.61% and 55.58%, respectively.
• 30-day 25-delta skew (C-P) for BTC fell to 7.26% while ETH rose to 6.18%.
• The futures market witnessed $151.80M worth of liquidations since Friday, with longs representing 79.39% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

BTC's implied volatility (IV) dipped slightly over the past day, with the 7-day IV at 51.85%, and the 30-day IV reaching 54.95%. This could be influenced by the US weekly jobless claims rising to 217K from 210K, while continuing claims hit the highest level since April at 1.8M, indicating a potential economic slowdown that may influence investor sentiment and decrease short-term speculative trading in BTC markets.

The term structure of Bitcoin currently exhibits a contango state; however, a noticeable shift to backwardation is evident in the mid-term tenors, where IV is escalating, surpassing that of the longer-dated contracts. This trend indicates traders positioning for heightened volatility around the 84-day to 147-day expiries, a timeline that aligns with the anticipated decisions on Bitcoin ETF approvals. The decline in short-term tenors underscores a market consensus that near-term price swings may be less severe than those expected in the medium term.

The 25-delta Call-Put skews for both 7-day and 30-day durations in the Bitcoin options market have retreated from their 30-day peaks, signaling a shift in trader sentiment. Specifically, the decline in the 7-day skew to 8.26 points to a growing inclination among traders to safeguard their bullish bets by increasingly incorporating put options into their strategies, highlighting a cautious stance in the near-term outlook for BTC.

On the other hand, ETH options demonstrated an uptick in skew values over the past day, a development that typically signifies a growing bullish conviction among traders. This increase suggests that market participants potentially anticipate favorable price movements for Ethereum.

During the US Trading Hours, @Paradigm focused on BTC strategies with an emphasis on the tail end of the year. In particular, there was a sale of a 400x 29-DEC-23 35000 BTC Call alongside a purchase of a 350x 24-NOV-23 40000 BTC Call. Shifting to ETH, notable activities were the buying of a 10635x 24-NOV-23 2000/2300 ETH Call Spread and the selling of a 5000x 24-NOV-23 2100 ETH Call.

Crypto Technical Analysis

On the 4-hour chart, BTC has experienced a price reversal to the downside, aligning with our previous analysis. Specifically, the price was unable to breach above the upper trendline and is currently approaching the lower trendline formed by local higher lows, serving as the next immediate support at approximately $34.4K. Should this level fail to hold, the next support zone can be identified on the daily chart in the range of $31.0K to $31.6K. This range previously functioned as a resistance zone in July. Conversely, if the price rebounds from the current support, BTC may retest the upper trendline, approaching $35.5K.

ETH has followed a similar trajectory, with its price being rejected at the previously identified resistance of $1.86K. Moreover, in the last 24 hours, the price movement has formed a horizontal channel on the 4-hour chart. Consequently, should the bearish momentum persist, the immediate support is situated at the lower boundary of the channel, at around $1.77K. If this support fails to hold, the price is likely to approach the support level at $1.74K. Notably, this level previously functioned as a resistance zone and was last observed as such at the beginning of October.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Mortgage Rates in the US Fall for the First Time in Two Months

• Apple Warns of Sluggish Holiday Quarter After China Slowdown

• BOE’s Bleak UK Outlook Lifts Bets on Sharp Rate Cuts in 2024

• Starbucks unveils plan to add 17,000 locations by 2030, cut $3 billion in costs

• Ukraine’s top military leader says war is at a stalemate and a ‘beautiful breakthrough’ is unlikely

• Elon Musk asks court to reject SEC's bid to make him testify in Twitter probe

• Goldman Sachs to promote 608 to managing directors, down from 2021

• Lithium producers stay bullish on EVs despite growing headwinds

• Cedar Fair, Six Flags to merge in search of amusement park recovery

Crypto

• Sam Bankman-Fried Guilty on All 7 Counts in FTX Fraud Trial

• Coinbase Beats Q3 Earnings Estimates While Trading Volume Falls

• MicroStrategy Acquired an Additional 155 Bitcoin Since End of Q3

• Abu Dhabi Enacts DLT Framework for DAOs, Web3, TradFi Firms

• Privacy Technology Firm Nym Plans Early 2024 Rollout of 'Decentralized VPN'

• Bitcoin Miner Marathon Tests BTC Mining With Methane Gas From Waste Landfill

• Hong Kong Will Allow Some Tokenized Securities-Related Activities

• PayPal Faces SEC Subpoena Over Its PYUSD Stablecoin

• Swiss National Bank to Work With SIX Digital Exchange, 6 Banks on Wholesale CBDC Pilot

• Genesis’ New Liquidation Plan Is a Material Swerve, U.S. Government Says

• Crypto at the Center of $300M Fraud Case in China

• Tether extends debt financing to Northern Data capped at $610 million

• ProShares launches first short ether futures ETF for bearish traders

• Aragon Association to dissolve itself, provide liquidity for ANT redemption

Deal Flow

• Treehouse acquires Origins to expand into NFT analytics

Yours sincerely,
Treehouse Research 🌳