🌳 US Weekly Jobless Claims Highest In More Than Eight Months As Labor Market Eases; Lightning Labs CEO Hints At Stablecoin On Bitcoin Network

10 May 2024, Friday

3:00 AM

🌳 US Weekly Jobless Claims Highest In More Than Eight Months As Labor Market Eases; Lightning Labs CEO Hints At Stablecoin On Bitcoin Network

BTC

ETH

S&P Futures 500

$62,878.92

$3,027.71

$5,244.00

(+2.48%)

 (+1.40%)

(+0.64%)

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


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Our Daily View

What We Are Covering Today

  • BOE and market expectations have converged regarding the possibility of a rate cut in June; Biden set to impose tariffs on China EVs in strategic sectors (More in Macro & TradFi)
  • Lightning network CEO hints at stablecoins on Bitcoin network; Taiwan proposes tougher AML measures for crypto service providers (More in DeFi & CeFi)
  • Bitcoin miners face lowest revenue since March 2020; 9 out of the 10 U.S. Bitcoin ETFs have seen zero flows (More in On-Chain)
  • Bitcoin's ATM IVs have declined indicating low short-term volatility; call-put skews suggest a neutral to bullish sentiment (More in Crypto Derivatives)
  • Both BTC and ETH bounced off from their respective support levels to the upside (More in Crypto Technical Analysis)

Macro & TradFi

U.S. jobless claims surged to their highest level in more than eight months, reaching 231,000 for the week ending May 4, indicative of a cooling labor market that might prompt the Federal Reserve to consider rate cuts this year. This rise in unemployment claims aligns with other signs of a labor market slowdown, including a significant drop in job openings and an increase in layoffs, suggesting a shift towards a more balanced employment environment that could ease inflation pressures.

In other news, President Joe Biden is poised to impose tariffs on Chinese EVs, targeting strategic sectors. This decision comes after reviewing the Section 301 tariffs implemented by Trump in 2018. This new tariff structure has a specific focus on industries encompassing electric vehicles, batteries, and solar cells, with existing levees being largely maintained. While this decision has not been finalized, it represents a key move by Biden in the US's economic race with China.

On Thursday, US equities rose broadly as encouraging jobless claims data fueled optimism for potential Fed rate cuts later this year. The Nasdaq 100 increased by 0.16%, the S&P 500 climbed 0.51%, and the Dow Jones advanced 0.85%. Apple gained 1.00% following news of its AI features being powered by in-house processors in data centers. Conversely, Airbnb fell 6.87% due to weaker-than-expected guidance, despite robust demand outside North America. Mary Daly noted that while current interest rates are constraining the US economy, more time may be needed to reach the Fed’s inflation target. Investors will be looking out for the US CPI data due next Wednesday, 15 May, at 20:30 SGT.

CeFi & DeFi

  • Lightning network CEO hints at stablecoins on Bitcoin network
  • Taiwan proposes tougher AML measures for crypto service providers
  • Robinhood Wells Notice Shouldn’t Deter Eventual Approval of an Ether Spot ETF: JPMorgan
  • Canadian financial regulator fines Binance 6 million CAD over money laundering violations

At the Financial Times Crypto and Digital Assets Summit, the CEO of Lightning network introduced the basics of Bitcoin lightning and hinted at their development towards a stablecoin on the Layer 2 network that leverages the Bitcoin Taproot upgrade. Her main motivation was to integrate a token with a store of value on the blockchain that is both secure and decentralized. Hence, her choice of the Bitcoin network. The introduction of stablecoins could potentially pave the way for the necessary infrastructure to enable the issuance of stablecoins and real-world assets on the Bitcoin network, leading to increased user activity and adoption of digital assets.

Meanwhile, Taiwan proposed four amendments to the country’s AML regulations focusing on cryptocurrency firms. This regulatory framework encompasses four key components: the Fraud Crime Harm Prevention Regulations, the Money Laundering Prevention Law, the Technology Investigation and Security Law, and the Communications Security and Supervision Law. The consequences of non-compliance are jail terms and hefty fines. Taiwan’s proposed law seeks to protect investors and impose a tougher stance on foreign cryptocurrency platforms to establish local firms in Taiwan and AML registration.

On-Chain

CryptoQuant’s analysis indicates that Bitcoin miners are experiencing substantial financial strain following the recent halving event. Revenue for miners has sharply declined to its lowest point since the March 2020 COVID market crash, marking a significant downturn in miner compensation. This reduction in earnings has led to a decreased mining hashrate, evidenced by the Bitcoin network undergoing its fourth negative difficulty adjustment this year. The most recent adjustment, at -5.6%, is the largest drop since November 2022, following the FTX collapse.

Meanwhile, the Bitcoin ETF market saw a modest net inflow of $11.5 million, as analyzed by @SpotOnChain. This inflow was primarily contributed by the Bitwise ETF (BITB), which recorded a daily flow of $11.5 million, while the other nine U.S. Bitcoin ETFs, including the prominent Grayscale ETF (GBTC), showed no new inflows.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH declined slightly to 52.20% and 61.12%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC recovered to -0.07% while ETH tumbled to -4.46%.
  • The futures market witnessed $113.6M in liquidations, with shorts representing 61.98%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

16.30%

AVAX

OKX

dYdX

11.86%

AVAX

OKX

Bybit

11.10%

ADA

OKX

Bybit

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.


Today, Bitcoin ATM IVs have decreased, with the 7-day IV dropping to 43.57% and the 30-day IV reaching a 30-day low of 49.51%. This decline likely reflects the current absence of significant catalysts for Bitcoin, indicating lower market expectations for short-term price movement.

The persistent contango in Bitcoin's term structure indicates that market participants expect future volatility to exceed current levels. Concurrently, the overall decrease in IVs across the curve suggests expectations of BTC price stabilization.

Bitcoin’s 7-day and 30-day call-put skews have rebounded to -1.06% and -0.07%, respectively. This recovery is likely due to a recent corrective uptick in BTC's spot price, prompting option investors to anticipate a continued uptrend. The skew's proximity to 0% indicates a balanced demand between calls and puts, reflecting a neutral sentiment in the market.

Lastly, @Paradigm highlighted option flows this week, emphasizing downside coverage with strategically put purchases and structured positions. Key BTC trades encompassed the sale of 100x 28-Jun-24 50000/70000 Bull Risk Reversals. Significant ETH trades included the sale of 1500x 24-May-24 3000 Calls.

Crypto Technical Analysis

Moving on to Technical Analysis, as the downward momentum from the head and shoulders pattern met the identified support at $60K, BTC's price has swiftly reversed to the upside, currently at the $62.8K level. Consequently, $60K remains a key psychological support zone if the bears regain control of the market. Meanwhile, if the bullish trend persists, the immediate resistance lies at the $67K level, last observed in late April, representing a potential upside of 6.5%.

Meanwhile, ETH has experienced similar movements in the last 24 hours as its price bounced off the $3K support and moved to the upside. Looking ahead, the immediate resistance lies with the upper trendline formed by the lower highs at roughly $3.13K. If this level is breached, ETH will have effectively broken above the triangle, potentially signaling a larger upside potential, with the next resistance likely around the $3.3K level.

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