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Treehouse Daily11 Oct 2023

🌳President Biden Announces Expedited Military Assistance To Israel; Ex-Alameda CEO Caroline Ellison Says Sam Bankman-Fried Directed Her To Commit Fraud

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BTC

ETH

S&P Futures 500

$27,461.00

$1,574.00

$4,392.25

(-0.38%)

 (-0.27%)

(+0.45%)

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


GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

  • President Biden announces expedited military assistance to Israel; Samsung set to report an estimated 78% decrease in its third-quarter operating profit (More in Macro & TradFi)
  • Ex-Alameda CEO Caroline Ellison says Sam Bankman-Fried directed her to commit fraud; Hamas-linked crypto accounts frozen by Israeli police with Binance’s help (More in DeFi & CeFi)
  • 6-year dormant BTC wallet transfers 2,995 $BTC to two newly created wallets; Notable accumulation of $575.6K $LINK by an unknown institution operating through 81 newly established wallets (More in On-Chain)
  • BTC's skews suggest increased downside hedging; IVs remain muted awaiting key economic releases (More in Crypto Derivatives)
  • BTC continues to move slightly lower while ETH hovers around its current support zone (More in Crypto Technical Analysis)

Macro & TradFi

President Joe Biden announced expedited military assistance to Israel in response to an unexpected assault by Hamas. This crucial aid, comprising ammunition and interceptors, aims to reinforce Israel's "Iron Dome" anti-missile systems, crucial for the nation's defense against ongoing attacks. In the diplomatic arena, Biden has engaged with key international leaders from Germany, France, Italy, and the UK, consolidating support for Israel while collectively denouncing Hamas. Meanwhile, China adopts a neutral stance, expressing sorrow over the loss without assigning blame or extending immediate aid. As tensions escalate, Biden warns of a swift, decisive response if similar atrocities were to transpire on US soil, pledging additional military supplies to Israel in the coming days.

On the other hand, Samsung Electronics Co Ltd has reportedly experienced a significant estimated 78% decrease in its third-quarter operating profit, dropping to 2.4T Won ($1.79B) from 10.85T Won year-over-year (YoY) due to the ongoing global chip surplus. Notably, the third-quarter profit still marked an improvement from the first and second quarters of this year. However, losses in Q3 are still anticipated to be around 3T Won as Samsung shifts focus to producing more profitable DRAM chips used in AI, reducing the production of older, less profitable chips. The company’s revenue is expected to be down by 13% YoY, with detailed earnings set to be released on October 31.

Wall Street edged higher, with the S&P 500, DJIA, and Nasdaq Composite gaining 0.52%, 0.40%, and 0.58% respectively. These moves come as stocks rose after Fed officials’ comments bolstered speculation that the Central Bank is heading toward another pause in interest-rate hikes. Moving on to Asia, the Nikkei 225 and Hang Seng each rose 0.39% and 1.65% respectively. Producer Price Index data will be released today at 20:30 SGT. Market Participants will then be looking at the FOMC Meeting Minutes due this Thursday at 02:00 SGT, as well as CPI data on the same day at 20:30 SGT.

DeFi & CeFi

  • Ex-Alameda CEO Caroline Ellison says Sam Bankman-Fried directed her to commit fraud
  • Hamas-linked crypto accounts frozen by Israeli police with Binance’s help
  • Galxe replacing 110% of funds users lost in recent front-end hack, over $400K
  • UK financial watchdog restricts Binance partner from issuing crypto ads
  • Bitfinex crypto exchange owner makes $150 million share buyback offer to hack victims
  • Spencer Ventures buys 144 Pudgy Penguins from 3AC’s NFT collection for mid-six figures
  • Metapixel, a Web3 game built by Korean AAA game studio NPIXEL in partnership with Aptos, has been suspended indefinitely

Caroline Ellison, the former CEO of Alameda Research, has emerged as the key witness in the trial of Sam Bankman-Fried (SBF), the founder of FTX. In her testimony, Ellison admitted to engaging in fraudulent activities and financial crimes at SBF’s direction. She manipulated Alameda's balance sheets to present a more favorable image to investors, effectively making the company's financial position appear less risky than it was. Furthermore, Ellison disclosed that Alameda utilized funds from FTX for internal investments and political donations, particularly highlighting SBF's belief in the effectiveness of such donations for political influence. Despite her role as CEO of Alameda, major decisions ultimately rested with SBF, who even discouraged Ellison from holding equity in Alameda.

In other news, the Israeli police, in conjunction with the defense ministry, intelligence agencies, and Binance, froze cryptocurrency accounts linked to the Palestinian militant group Hamas. All funds seized from these accounts will be directed to the Israeli national treasury. Binance had previously cooperated with Israeli authorities to dismantle a terrorism financing operation associated with Iran's Quds Force and Hezbollah. Since 2021, Israeli authorities have seized approximately 190 Binance accounts linked to various terrorist groups. Notably, the U.S. Commodities Futures and Trading Commission (CFTC) filed a lawsuit against Binance's CEO in March, alleging the company's officers were aware of "HAMAS transactions" on the platform. Binance has maintained that it is working continuously to combat terror financing and ensure safety for the blockchain ecosystem and global community.

On-Chain

According to @lookonchain, a long-dormant wallet, inactive for six years, has re-emerged, transferring a substantial 2,995 $BTC (valued at approximately $82.3M) to two newly created addresses. The original accumulation of these assets, which amounted to 3,200 $BTC, took place on May 7, 2016, at the then-price of $459 per Bitcoin, totaling an investment of $1.47M. The sudden mobilization of these long-held assets carries significant market implications, signaling a potential strategy realignment and price volatility in the $BTC market.

On the other hand, @lookonchain has also reported discernible accumulation by an unknown institution operating through 81 newly established wallets, acquiring an additional $575.6K $LINK (approximately $4.2M) in response to recent price dips. This is not an isolated transaction; since September 19, the collective of wallets has systematically amassed a substantial total of 7.66M $LINK, equivalent to around $56M, sourced from Binance. These deliberate and strategic accumulation activities signal robust institutional confidence in $LINK's potential value and perhaps a forecasted upward market trajectory.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remained relatively unchanged at 38.19% and 36.22%, respectively.
  • 30-day 25-delta skew (C-P) for BTC fell to -2.60% while that of ETH maintained at -6.99%.
  • The futures market witnessed $31.48M worth of liquidations yesterday, with longs representing 73.70% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

27.79%

BNB

Bybit

Binance

19.12%

DOGE

Bybit

dYdX

8.50%

SOL

Binance

OKX

Source: @CexyArbBot Telegram Bot

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.


Over the last 24 hours, BTC's IVs have exhibited a muted behavior. The 7-day IV increased slightly from 32.23% to 32.61%, while the 30-day IV witnessed a marginal increase, moving from 32.44% to 32.80%. There is limited IV movement as traders wait for the FOMC Meeting Minutes and the CPI data release tomorrow.

Turning our attention to term structures, BTC continues to underscore a contango formation, with minimal changes across the curve. ETH, similarly, underscores a contango formation, and saw minimal changes from yesterday.

Diving into the skew dynamics, BTC's 30-day 25-delta (C-P) fell from -1.47% to a pronounced -2.60%. This trend, further solidified by the 7-day skew's descent from -2.02% to -2.78%, indicates that BTC option investors are increasingly hedging against downside movements of the market.

Lastly, as outlined by @Paradigm yesterday, significant BTC option activities included the acquisition of 825x 24-Nov-23 25000 BTC puts and a 212x 13-Oct-23 26500/20-Oct-23 26000 BTC put calendar, both purchased. In the ETH segment, trades involved a sale of 6125x 29-Mar-24 1400/2300 ETH bear risk reversal and a purchase of 2000x 29-Dec-23 1400/1800 ETH bull risk reversal.

Crypto Technical Analysis

Switching to the technical analysis for BTC, a slight downward movement continues in the previous trading session. Presently, the price remains slightly above the 100 Simple Moving Average (SMA) line, which serves as an immediate support level. If this support fails to hold, it aligns with our prior analysis, suggesting that, should selling pressure persist, a potential support level could materialize around the $25.6K mark. On the other hand, a rebound from the current position may initially encounter minor resistance around the $27.8K level before approaching the $28.9K support-turned-resistance zone.

Shifting our focus to ETH, we witnessed a momentary breach of the $1.57K support level to the downside, with prices dipping to as low as $1.55K. However, this breach turned out to be a fakeout, as the price swiftly rebounded above the support zone a few hours later. With the price hovering in close proximity to the $1.57K support area, a confirmed move to the downside is likely to direct the price towards the $1,540 level, marking the 30-day low. Conversely, if ETH initiates a reversal from its current position, the price is expected to advance towards the resistance level observed at $1.65K before targeting the local highs at $1.74K.

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