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Treehouse Daily13 Sep 2023

🌳UK Wage Growth Pressures Bank of England; CoinEX Crypto Exchange Faces Significant Hack, Pledges Compensation

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BTC

ETH

S&P Futures 500

$25,912.92

$1,596.23

$4,464.75

(+2.81%)

 (+2.47%)

(-0.40%)

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

  • UK wage growth accelerates, pressuring Bank of England; ECB grapples with policy amid slowdown (more in Macro & TradFi)
  • Crypto exchange CoinEX hacked for nearly $30M; Binance.US president departs, cuts staff (more in DeFi & CeFi)
  • Markets embrace HODLing as Long-Term Holders accumulate record 14.74M BTC; Liveliness metric back at 2020 levels (more in On-Chain)
  • BTC’s implied volatility remains steadfast; BTC 25d 30-day skew rose sharply as spot prices staged recovery (more in Crypto Derivatives)
  • BTC shows recovery momentum; ETH grapples with resistance amid neutral selling territory (Crypto Technical Analysis)

Macro & TradFi

UK wage growth surged to a record 7.8% in the three months to July, outpacing an inflation rate of 6.8%, even as unemployment edged up to 4.3% and hiring momentum slowed, according to data from the Office for National Statistics. This rapid wage growth, boosted partly by special payments to NHS workers and civil servants, places further pressure on the Bank of England, which is already concerned about persistent inflationary pressures. The current trajectory suggests a probable interest rate hike, with investors forecasting a 0.25 percentage point increase to 5.5% in the near term. For stakeholders, this underscores the balancing act policymakers face in ensuring economic stability amidst inflationary threats and labor market uncertainties.

In other news, The European Central Bank (ECB) is facing a significant policy dilemma amid weakening eurozone growth and persisting inflation. Although rates have increased by 4.25 percentage points since July 2022, there's growing division among ECB governors and market participants on the course ahead. Recent indicators suggest a looming economic slowdown, exacerbated by the current interest rate of 3.75%, and the European Commission has downgraded the eurozone's growth projection. Nonetheless, core inflation remained elevated at 5.3% last month, with potential price pressures from a tight labor market and global supply shocks in oil and gas markets.

US equities faced headwinds yesterday, with the DJIA slipping 0.05%, the S&P 500 dropping 0.57%, and the NASDAQ receding by 1.04%. Concurrently, Brent crude oil prices surged to a 2023 peak, settling at $92.06 per barrel—amounting to a 1.6% increase. This market movement underscores heightened investor apprehension over escalating price pressures, especially as the market anticipates the forthcoming US consumer price index data, pivotal in informing the Federal Reserve's imminent interest rate decision next week.

DeFi & CeFi

  • Crypto exchange CoinEX hacked for nearly $30M
  • Binance.US president departs, cuts staff
  • Gensler says SEC is reviewing Grayscale ruling, spot Bitcoin ETF applications
  • Franklin Templeton files for spot Bitcoin ETF

Several hours ago, crypto exchange CoinEX experienced a hack that drained its Ethereum hot wallet. At the point of the hack, according to detection platform Cyvers, 3 suspicious addresses received $18M from the CoinEX hot wallet. On-chain detective ZachXBT noted that CoinEX was drained of a further $11M on TRON and $291K on Polygon. A while later, CoinEX began shifting their hot wallet assets to a cold wallet address. They announced a wallet maintenance period and disabled deposit and withdrawal operations. CoinEX eventually released an X statement saying their Risk Control System detected the anomaly, prompting them to assemble an investigative team. They announced that the funds affected were only a small portion of CoinEX’s total assets, reassuring users that they would receive 100% compensation and transparency on the matter as investigations continued.

In other news, Binance.US president Brian Shroder has departed from the company amid uncertainty and declining business. The exchange has also announced layoffs of one-third of its staff, as it faces challenges and regulatory scrutiny. Binance.US, the American offshoot of Binance, has experienced a decline in its business, with customers no longer being able to use US dollars to buy cryptocurrencies on the platform. Monthly volumes on Binance.US have also dropped significantly, from $10.58B in January to $70M currently. This is concurrent with regulatory woes happening to Binance’s parent company, founded by Changpeng Zhao, which include high-profile executive departures, including Russian executives, Chief Strategy Officer Patrick Hillman, and compliance officer Steven Christie.

On-Chain

Shifting our focus to on-chain activity, amid ongoing market apathy and low volatility, long-term holders remain resolute in their belief. The supply held by the Long-Term Holder cohort has hit a new all-time high at 14.74M BTC. Conversely, the Short-Term cohort, which represents the more active segment of the market, now holds its lowest supply since 2011. The rising BTC held by long-term holders suggests conviction in its future value, while the decline in short-term holder supply suggests reduced speculation, indicating a maturing market sentiment.

Furthermore, @Glassnode’s Liveliness metric underscores this trend. Liveliness gauges the distribution of 'investor holding time' across the market. In 2021, there was a significant surge in Liveliness as older coins were spent to realize profits. However, as the bear market of 2022 unfolded from May to December 2021, a distinct shift occurred, transitioning from a trader-centric market to a HODLer-centric one. Presently, Liveliness has reverted to late 2020 levels, displaying a progressively steeper decline. This suggests that the cumulative 'investor holding time' is on the rise, with investors becoming increasingly reluctant to spend or part with their held coins.

Crypto Derivatives

  • Funding rate flipped back to positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC rose to 43.58%, while it fell to 39.26% for ETH.
  • 30-day 25-delta skew (C-P) rose on both BTC and ETH to -1.01% and -2.17%, respectively.
  • The futures market witnessed $108.42M worth of liquidations in the last 24 hours, with shorts representing 70.42% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

11.11%

DOGE

dYdX

Bybit

10.39%

SOL

dYdX

Bybit

7.14%

XRP

Binance

Bybit

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.


For the options market, implied volatility remained relatively stable as spot prices briefly recovered following its slump on Monday. Near-term IV is also likely to see a ramp-up into inflation print today.

Term structure remains in contango with a notable drop in IV on the front-end of the curve while IV on medium to longer-dated tenors remains unchanged.

Elsewhere, the 30-day (call-put) skew on BTC rose sharply to -1.01% as spot prices attempted a rally back above the $26K handle. The quick rise in skew may be a result of traders cashing in on their short-term downside protection positions.

Lastly, @Paradigm noted mixed interest in options trade. Key BTC trades included a 1,100x 27-Oct-23 $33K call purchase and 325x 29-Sep-23 $25K puts bought. For ETH noteworthy trades includes 4,000x 29-Sep-23 $1.9K call bought and 2,500x 15-Sep-23 $1.5K puts bought.

Crypto Technical Analysis

Moving on to technical analysis of BTC's daily chart, there was an identified significant price recovery, marked at 4.61% as of yesterday. At present, BTC gravitates around the 25.8K mark, signaling a commendable retracement above its previously identified support. However, on the opposing end, there exists a pronounced resistance, delineated at the 28K boundary. Delving into the RSI, it stands at 51.89, which indicates it may be in a neutral selling zone. Further accentuating this analysis with the Fibonacci retracement tool, it is evident that the recent price movement retraced to the 38.2% level, around 26.4K, coinciding with the one attained on September 8th, hinting at its significance. The 38.2% Fibonacci level might emerge as an implicit resistance level that BTC bulls need to overcome.

Analyzing the 4-hour chart for ETH, we've observed a 3.86% rally, with the price now situated at 1.59K. Notably, ETH confronts significant resistance at the 1.6K mark—a level it has grappled with since its slip below it and the subsequent breach of the descending triangle pattern on Monday. On the downside, should the current bullish momentum wane, the next crucial support to monitor stands firmly at 1.45K, which represents a potential downturn of 7.7% from its current price. The RSI further corroborates this neutral stance, registering a value of 46.61, suggesting the asset currently hovers in a relatively balanced selling territory.

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Treehouse Research 🌳

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