🌳 US’s $11.6B Deal With TSMC Set To Enhance AI Chip Ambitions; SEC Defers BTC ETF Options Decision

09 Apr 2024, Tuesday

2:41 AM

🌳 US’s $11.6B Deal With TSMC Set To Enhance AI Chip Ambitions; SEC Defers BTC ETF Options Decision

BTC

ETH

S&P Futures 500

$71,394.65

$3,695.14

$5,254.00

(+3.02%)

 (+7.86%)

(-0.01%)

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


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What We Are Covering Today

  • US’s $11.6B deal with TSMC set to enhance AI chip ambitions; Investors exhibit diminished optimism regarding US interest cuts this year (More in Macro & TradFi)
  • SEC delays decision on BTC ETF options; Clearstream joins ECB digital Euro trials (More in DeFi & CeFi)
  • Bitcoin achieves new ATH, shifting ownership; Glassnode reports significant supply redistribution (More in On-Chain)
  • DVOL for BTC and ETH maintains high levels; BTC IVs continue to increase across the board (More in Crypto Derivatives)
  • Bitcoin exhibits a bullish pattern; Ethereum breaks the descending trendline, testing new resistance levels (More in Crypto Technical Analysis)

Macro & TradFi

Taiwan Semiconductor Manufacturing Company (TSMC) strengthens President Joseph R. Biden Jr.'s goals for domestic AI chip production through an $11.6B agreement to build a manufacturing facility in Phoenix, Arizona, from 2028. This facility represents TSMC's second such venture in the United States. Their inaugural facility, also located in Arizona and announced in 2020 during the Trump administration, is slated to commence production in the coming year. Afterward, they aim to construct a third fabrication facility, operational by 2039, raising their total investment in the US from $40B to $65B. Under this agreement, Washington would provide TSMC with $6.6B in grants and up to $5B in loans. In return, this helps the US move towards its goal of bringing 20% of the world’s advanced semiconductor manufacturing onshore by 2030. This strengthens the US's position in national security and enhances its ability to support technological operations requiring semiconductor usage.

In other news, Investors are exhibiting a pronounced decrease in their anticipation of interest rate reductions by the Federal Reserve in the current year. This shift in sentiment is attributable to the emergence of strong economic data, which has bolstered the conviction that the central bank will be compelled to maintain elevated borrowing costs to mitigate inflationary pressures. Consequently, market expectations have been revised downwards, currently reflecting only two quarter-point rate cuts by the Fed throughout 2024, with the US job data last Friday compounding onto this conviction. Additionally, the likelihood of a third rate cut is estimated at a mere 50%, signifying a dramatic reversal from the beginning of the year when projections hovered between six and seven reductions. This recalibration of expectations regarding US monetary policy poses a potential challenge for other central banks, whereby implementing multiple rate cuts within the current year could lead to a depreciation of their respective currencies relative to the US dollar.

On Monday, the three major stock market indices were off to a slow start, as investors adopted a cautious approach in anticipation of key inflation reports scheduled for release later this week. The Nasdaq Composite rose 1.2%, while the S&P 500 gained 1.1%, although both closed the week lower. The Dow Jones Industrial Average and S&P 500 declined by 0.03% and 0.04% respectively, while the Nasdaq appreciated by 0.03%. Moving on to the top market movers, Apartment Income REIT Corp (AIRC) appreciated by 22.42% to close at $38.38. The catalyst is news that Blackstone will acquire it for $10B, paying $39.12 for each share of the real estate investment trust, representing a premium of about 25% to its closing price on Friday. Investors will anticipate the release of US CPI data on Wednesday at 20:30 SGT to gain clarity on the market. These reports are expected to shed light on the timing of potential interest rate cuts by the Federal Reserve, despite ongoing signs of robust economic growth.

CeFi & DeFi

  • SEC defers BTC ETF options decision
  • Clearstream joins ECB wholesale CBDC trials
  • 1inch introduces Web3 Debit Card
  • Ethereum-based assets see 4th consecutive week of outflows

The United States Securities and Exchange Commission (SEC) has postponed its decision on allowing the New York Stock Exchange (NYSE) to offer options trading on spot Bitcoin ETFs, specifically affecting the Bitwise Bitcoin ETF (BITB) and the Grayscale Bitcoin Trust (GBTC), among others. This delay, announced in an April 8 filing, is part of the SEC's extended timeline to thoroughly evaluate the proposed rule changes, with a new decision deadline set for May 29. This deferment follows a similar decision for Nasdaq's request for options trading on BlackRock’s iShares Bitcoin Trust (IBIT), highlighting the SEC's cautious approach towards integrating Bitcoin-related derivative products into mainstream financial markets, despite arguments from industry leaders for their approval to enhance market robustness.

Clearstream, a subsidiary of Deutsche Börse Group and a central securities depository, has been selected to participate in the European Central Bank's (ECB) digital euro trials, focusing specifically on wholesale central bank digital currency (CBDC) transactions using tokenized securities. As the sole central securities depository involved in this first phase of ECB's digital euro "preparatory" trials, Clearstream is set to integrate its D7 post-trade platform with distributed ledger technology (DLT) components to facilitate transactions. The trials, running from May to November, will explore euro-denominated issuances and delivery-versus-payment (DvP) transactions across different payment models, utilizing real central bank money. This initiative aligns with the broader ECB efforts to advance the digital euro project, aiming to explore DLT's potential in enhancing the Eurosystem's digital payment infrastructure. Clearstream's involvement shows an increasing intersection of traditional finance with blockchain technology, a significant stride towards integrating digital currencies into mainstream financial systems.

On-Chain

Glassnode's analysis highlights a significant momentum in Bitcoin's market dynamics, with the cryptocurrency's price surpassing its previous all-time high (ATH) in early March, signifying a phase of price discovery. This milestone has catalyzed a notable volume of transactions where investors are taking profits, leading to a reallocation of coin ownership from lower to higher cost bases. This transition reflects an increase in demand and liquidity for Bitcoin and underscores the growing investor confidence and capital inflow into the cryptocurrency market. The Realized Cap metric, which measures the cumulative USD value 'stored' in Bitcoin, has reached a new ATH of $540B, growing at an unprecedented rate of over $79B per month. The growing BTC Realized Cap illustrates the expanding liquidity and value accumulation within the asset class.

In another analysis by Glassnode, the recent uptick in Bitcoin's price has led to a notable shift in the market's supply, particularly between Long-Term Holders (LTHs) and Short-Term Holders (STHs). Historically, the supply of Bitcoin has been tightly held, but as prices increase and unrealized profits grow, LTHs are becoming more inclined to sell their holdings. Since December 2023, there has been a significant reduction in LTH supply, with a decrease of 900K BTC from the peak of 14.91M BTC, notably influenced by approximately 286K BTC in outflows from the GBTC trust. In contrast, STH supply has seen a rise of 1.121M BTC, absorbing the distribution pressure from LTHs, adding 121K BTC through acquisitions from the secondary market via exchanges. The shifts in the supply suggest that market participants are increasingly sensitive to profit opportunities as prices scale higher.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained flat around 75.44% and 78.37%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH decreased to 3.34% and ETH increased to 2.66%.
  • The futures market witnessed $181.50M in liquidations, with shorts representing 63.7%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

42.11%

DOGE

OKX

dYdX

32.96%

DOGE

Binance

dYdX

26.87%

BTC

Bybit

dYdX

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.


Bitcoin's (BTC) implied volatility (IV) for both the 7-day and 30-day periods experienced notable increases, indicating heightened market anticipation. This surge in the 7-day IV notably aligns with BTC's approach to the $72K resistance level, suggesting a market reaction to this critical test. Concurrently, the steady climb in the 30-day IV could be due to the upcoming BTC halving, highlighting the growing investor focus on the event.

Today's term structure for Bitcoin’s implied volatility continues to show a contango shape, suggesting higher anticipated volatility in the longer term compared to the short term. There were no significant changes from yesterday.

The BTC 25-delta call-put chart shows an increasing positive skew, with the 7-day IV surging significantly to a high of 4.89 indicating a short-term bullish sentiment among traders. The resilience of the U.S. economy, as demonstrated by robust employment data could be a driving factor for this increased bullishness. 

Lastly, @Paradigm’s highlighted significant BTC trades included purchases of 250x Puts for April 12 at $60K and $62K and a sale of 250x Strangles for April 26 at $70K/$75K. Calls for April 12 at $72K and a Call Spread for April 26 at $70K/$80K were sold. For ETH, a large block of 2750x Calls for April 19 at $3.7K was sold, along with a Call Calendar spread involving 2000x options for May 31 / June 28 at $4.2K/$5.5K. Calls for April 19 at $3.65K and $3.75K were also sold.

Crypto Technical Analysis

Moving on to technical analysis for BTC, the price action reveals a brief touch on the resistance level at $72K before a slight retracement to the resistance-turned-support at $70K. Despite this pullback, BTC maintains its posture within the confines of an ascending triangle pattern, signifying a bullish continuation pattern in the making. The lower boundary of this pattern has been respected, underpinning the price as it consolidates. This ascending triangle is indicative of increasing buying interest as each dip leads to higher lows. The immediate support level stands firm at $70K, while overhead, the resistance looms at the $72K mark—a pivotal point. If surpassed, it may pave the way for further upward momentum. The RSI currently reads at 61.36, leaning towards the overbought territory but without definitive signs of a trend reversal. The RSI's uptrend mirrors the price action, reinforcing the bullish sentiment observed.

Moving on to ETH, there is an observed breach of a descending trendline, indicating a shift in momentum. This breakout signifies a reversal of the prior bearish sentiment encapsulated by the descending triangle pattern. Currently, ETH is testing a crucial juncture at the $3.67K level, which previously served as resistance but may now be establishing itself as support. This pivotal price point is critical for sustaining the current breakout. If Ethereum manages to maintain this level, it could reinforce buyer confidence, potentially setting the stage for a continued uptrend. The RSI supports this positive outlook, having climbed to a strong 75.84, suggesting increasing bullish momentum, though it also warrants caution for a possible overbought scenario. A sustained hold above the $3.67K level could encourage a test of a higher resistance level at $4K, whereas a break below could lead to a retest of former resistances, now turned supports, possibly around the $3.4K region. The market’s reaction to this newfound support will be telling of the potential for further gains or the necessity for a consolidation phase.

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