🌳US Retail Sales Data Show Strong Market Resilience; Singapore Finalizes The Stablecoin Regulatory Framework

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• US retail sales exceed market expectations; The People’s Bank of China unexpectedly cut its loan rates by 15 bps (more in Macro & TradFi)
• Singapore’s central bank releases stablecoin regulatory framework; First Europe spot bitcoin ETF launches (more in DeFi & CeFi)
• Voyager’s substantial $63M in asset liquidation and $USDC activity; Strong positive sentiment seen from the rise in whale accumulation of $ADA (more in On-Chain)
• BTC and ETH IV dip after Retail sales data release, while BTC maintains call skew (more in Crypto Derivatives)
• BTC recovered from 100-period SMA breach, finding robust trendline support; ETH pulls back from the resistance at the channel upper boundary. (more in Crypto Technical Analysis)

Macro & TradFi

US retail sales surged beyond expectations in July, indicating a robust economy and mitigating recession concerns. The Commerce Department's report revealed increased consumer spending on online purchases, dining out, hobbies, and clothing. Despite the Federal Reserve's efforts to curb inflation with interest rate hikes, consumers displayed resilience, driven by strong wage gains and a tight labor market. The surge prompted Goldman Sachs to raise its third-quarter GDP forecast to 2.2%. Although the Fed's aggressive rate hikes were not expected to continue due to receding inflation, concerns lingered about the potential impact of slowing job growth and increasing credit card balances on consumer spending.

Meanwhile, the People's Bank of China recently cut its one-year loan rate by 15 basis points to 2.5%, the steepest cut in three years. This move followed weak July data showing slow consumer spending growth, declining investment, and rising unemployment. The broader economic situation appears grim, with bank loans at a 14-year low, deflation setting in, and exports contracting. Pressure is mounting on Xi to address issues like the heavily indebted property sector and increased consumer spending, which has been referred to as the "most urgent goal." China's economic struggles also have global repercussions, impacting the worldwide economy and influencing stocks and bonds. US Treasury Secretary Janet Yellen acknowledged China's slowdown as a risk factor for the American economy. As concerns grow, experts suggest that further monetary and fiscal actions are needed to stabilize the situation.

Lastly, during the previous trading session, the Nasdaq 100, S&P 500, and Dow Jones Industrial Average declined by 1.14%, 1.16%, and 1.02% respectively. NY Empire State Manufacturing Index saw a sharper-than-anticipated contraction in August, dropping to -19.0 from 1.1. Additionally, Minneapolis Fed President and FOMC voter, Neel Kashkari, emphasized that inflation remains elevated despite ongoing efforts to curb it. He added that he's "not ready" to call an end to rate hikes and wants to see "convincing evidence that inflation is well on its way back down to 2%".

DeFi & CeFi

• Singapore's Central Bank Releases Stablecoin Regulatory Framework
• Jacobi Asset Management Launches First Spot Bitcoin ETF in Europe
• New Zealand crypto exchange Dasset enters liquidation
• Binance Connect shutting down on Aug. 16
• Sei Mainnet is Live After Testnet Sees More Than 7.5M Wallets Created

The Monetary Authority of Singapore (MAS) has unveiled a comprehensive regulatory framework for stablecoins following an extensive public consultation held in the preceding year. This framework applies to single-currency stablecoins that are anchored to the Singaporean dollar or any G10 currency, encompassing major denominations such as the US dollar, Euro, and British pound. To achieve regulatory compliance in Singapore, stablecoin issuers are mandated to satisfy stipulated prerequisites regarding value stability, capital reserves, and redemption provisions. Stablecoins must maintain a minimum base capital of 1 million Singapore dollars and fulfill redemption requests within five business days. Notably, the Singaporean arm of Circle, a prominent stablecoin issuer, has already procured a digital payment token services license from MAS. This initiative aligns with the global trend of multiple jurisdictions, including the US, actively formulating and implementing analogous regulatory frameworks for stablecoins.

Elsewhere, London-based Jacobi Asset Management has successfully debuted Europe's first spot bitcoin exchange-traded fund (ETF) on Euronext Amsterdam, overcoming delays caused by digital asset market challenges. The Jacobi FT Wilshere Bitcoin ETF, regulated by the Guernsey Financial Services Commission, operates as "BCOIN" and benefits from custody by Fidelity Digital Assets and market making by Flow Traders. This pioneering ETF, differentiating from prevalent exchange-traded notes (ETNs), grants direct ownership of underlying shares and refrains from leveraging or derivatives. Notably preceding the US, Europe's ETF launch signifies a significant step for spot bitcoin offerings amid numerous unsuccessful SEC applications. Hopes for SEC approval have been revived due to applications led by BlackRock featuring "surveillance-sharing" agreements targeting market manipulation concerns.

On-Chain

According to @lookonchain, over the past four days, Voyager has executed substantial divestitures on Coinbase, liquidating an aggregate of 49 tokens valued at approximately $63M. The notable sales include 781 $BTC ($23M), 9,570 $ETH ($17.6M), and a sizable 1.4T of $SHIB ($14.4M), among other assets. In parallel, there has been significant fiat-pegged transactional activity with Voyager receiving 84.5M $USDC from Coinbase and subsequently depositing 85M $USDC to Circle. The net activity suggests a possible strategy realignment or liquidity bolstering, with the intention of either looking to capitalize on future opportunities or fortifying its position amidst perceived forthcoming market volatility.

According to @santiment, there has been a substantial rise in the number of wallets holding 100K or more $ADA to 25k wallets, a level last seen more than a year ago in April 2022. Such accumulation by 'whales' and 'sharks' suggests a robust and growing conviction in Cardano despite the bear market conditions. Such movements could precede significant technological advancements or announcements, which could catalyze a price appreciation for Cardano.

Crypto Derivatives

• BTC and ETH funding rates remain positive.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH remain unchanged at 34.40% and 31.42%, respectively.
• 30-day 25-delta skew (C-P) for BTC increased to 2.89% while that of ETH dipped to -1.28%.
• The futures market witnessed $131.83M worth of liquidations in the last 24 hours with longs representing 92.95% of the total.

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

Bitcoin's ATM IV has shown a marginal dip from yesterday possibly influenced by the July Retail sales, which rose more than expected by 0.7% MoM, up from 0.3%. The Retail sales data not only exemplifies consumer resilience but also implies that the broader economy possesses the robustness to accommodate higher interest rates, potentially reflecting investor sentiment on BTC’s stability in a potentially tightening monetary environment.

Both BTC and ETH term structures persist in a contango state. Looking back over a 1-day period, the term structure has remained largely unchanged. As such, options traders are potentially shorting volatility to capitalize on the low IV across all tenors.

The 7-day and 30-day (C-P) skews for BTC remain to be positive while ETH has maintained a put skew. Noticeably, the 7-day skew for BTC has dipped to 2.89 whereas ETH’s 7-day skew has increased to -0.12. While BTC's 7-day skew indicates a slight preference for calls over puts, signaling potential upside expectations, ETH's move into a less pronounced put skew suggests traders might still be hedging against or anticipating near-term downside risks.

The dominant trading patterns identified by @Paradigm for BTC during today's session encompassed the purchase of 500x 18-Aug-23 $30,500 Calls, followed by the acquisition of 400x 18-Aug-23 $31,000 Calls, and then the purchase of 300x 29-Sep-23 $35,000 Calls. These actions highlight the bullish sentiment traders seem to be adopting in the prevailing BTC market scenario.

Crypto Technical Analysis

Transitioning to technical analysis, BTC underwent a marginal downtick during the preceding trading session, breaching the support confluence of the 100-period SMA on the 4-hour chart. Nonetheless, the price swiftly rebounded from the previously identified trendline, exhibiting a resilient response. Notably, this occurrence marks the fourth instance of price retracement from the said trendline, thereby solidifying its status as a notable support level.

Shifting focus to ETH, the price retracement observed in the prior session has denoted a pullback from the resistance at the upper boundary of the channel. Presently, the asset gravitates toward the midpoint of the channel. This price action further coincides with a breach of the 100-period SMA line in a bearish direction. In the forthcoming trajectory, a predisposition exists for the price to move towards the lower boundary of the channel, approximately at the $1.79K mark. This juncture carries significant support potency, aligning with the support region last witnessed in mid-May and confluently intersecting with the 200-day SMA line.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Oil prices steady as markets weigh weak China data, tighter crude supplies

• Hedge funds dump Chinese stocks aggressively as growth outlook dims

• AMC hit with fresh class-action lawsuit over stock conversion

• Venezuela rejects auction process that could lead to Citgo breakup

• Drugmaker Mallinckrodt moves toward second bankruptcy filing

• IMF in touch with Milei, Bullrich camps after Argentina primary -source

• Apollo Global pulls out of Yellow's bankruptcy financing plan

• Colombia's Grupo SURA cuts 2023 guidance, raises mid-term outlook after Nutresa deal

• Canadian inflation jumps in July, raising prospect of another rate hike

• TSX falls the most in 10 months as inflation data spooks investors

Crypto

• Singapore's Central Bank Releases Stablecoin Regulatory Framework.

• Crypto Mining Gets Its Own Lobbying Voice in Washington.

• Republican Lawmakers Demand Gensler Tell Them How Prometheum Got SEC Approval.

• FDIC Crypto Warning Underlines U.S. Banking Agencies' Arm’s-Length Policy.

• G20 Set to Crystalize Global Crypto Rules as India Wraps Up Presidency.

• De.Fi's Antivirus Tool Releases on zkSync Era Mainnet.

• Sei Mainnet is Live After Testnet Sees More Than 7.5M Wallets Created.

• Jacobi Asset Management Launches First Spot Bitcoin ETF in Europe

• Breaking: Binance Connect shutting down on Aug. 16.

• China’s new AI regulations begin to take effect.

• New Zealand crypto exchange Dasset enters liquidation.

• Silvergate CEO departs, with CFO leaving by the end of September

Yours sincerely,
Treehouse Research 🌳