Crypto Market Update

BTC 1.05% has retraced a portion of its early morning gains but remains decisively green on the day, now trading back above $69k. ETH 0.69% and SOL 1.32% are lagging, with ETH 0.69% stalling around $3,780 and SOL 1.32% trading just under $164. Equities are mixed after starting the day hot, with only three sectors currently positive. This comes amidst a constructive rates backdrop, with the US 10Y moving sharply lower, now trading around 4.41%, and the DXY N/A% challenging 104 as support once again. Additionally, the Fed funds futures market is moving back toward May levels. This move in rates was supported by an ISM Manufacturing PMI report released today, suggesting continued economic contraction in manufacturing, with PMI coming in at 48.7, below the consensus forecast of 49.6. However, prices paid were 57, lower than the forecasted 60, and employment came in at 51.1, well above the forecasted 48.5. Thus, the market seems to have avoided another stagflation narrative emerging. It is an action-packed macro week with JOLTs on Tuesday, ISM Services PMI on Wednesday, a forecasted ECB rate cut on Thursday, and more jobs data on Friday.

Biden Issues Veto

President Biden vetoed a resolution to overturn the SEC’s controversial Staff Accounting Bulletin 121, which requires financial institutions holding crypto for customers to include these assets on their balance sheets. This mandate can make it too costly for federally regulated banks to offer crypto custody services due to the need to maintain capital ratios. Biden emphasized the need for “appropriate guardrails” to protect consumers and investors while leveraging the benefits of crypto-asset innovation. Despite bipartisan support in Congress, Biden argued that repealing the bulletin would weaken the SEC’s ability to maintain a comprehensive financial regulatory framework, leading to financial instability and market uncertainty. Critics, including many in the industry, believe SAB 121 imposes unfair standards on crypto, potentially preventing banks from safeguarding digital assets and placing customers in the more risky unsecured creditor group in the event of bankruptcy. While Biden’s veto aligns with his previous commitments, it could damage the recent perception that Democrats are softening their stance toward crypto and further galvanize the industry ahead of the upcoming election.

Ethena Outshines Other Stables

Flows from ETFs continue to be positive, and volumes are rebounding. If there is one data point that suggests a mixed flows story, it’s the stablecoin outflows the market has witnessed over the past couple of weeks, with the lion’s share of outflows attributable to USDC 0.01% . One stablecoin that has not had any issues with flows is USDe, the synthetic dollar issued by Ethena Labs (ENA 0.69% ). USDe recently has reached a $3 billion supply, a mere four months after its public launch in February. As a reminder, USDe maintains its peg through arbitrage mechanics and a yield-returning cash-and-carry trade. It is essentially a tokenized basis trade. Currently, USDe comprises only a small fraction of the overall stablecoin market, ranking fourth behind USDT -0.01% , USDC 0.01% , and DAI 0.02% . However, its early parabolic growth has been nothing short of impressive.

Source: DefiLlama, Fundstrat

Source: DefiLlama, Fundstrat

Technical Strategy

Yield Guild Games has started off the week with a bullish breakout of May highs, bringing prices up to the highest levels since mid-April. Daily YGG 2.11% charts show today’s breakout above $1.075, which should have little to no resistance until $1.24, with additional short-term levels near $1.36. Only in the event of a move back over $1.36 would YGG begin its push to test all-time highs at $1.77, which looks likely sometime this Fall. Near-term, Monday’s minor breakout is an encouraging technical development, and volume is picking up to the highest levels in nearly two months. Pullbacks, if/when they occur, should find solid support near $1.03 with solid uptrend line support at $1.00 before pushing higher.

Daily Important Metrics Crypto Size Bullish signal is tied to the crypto market growing Market cap 2.57T +$25B(0.97%) BTC Dominance 53.02 % (0.35%) Stablecoins Increase in circulating stablecoins is a Bullish signal In Circulation +$112B (0.00%) In Exchanges +$20B (-0.22%) BTC Metrics A decrease in Bitcoin on exchanges is bullish, indicates investors are moving coins to cold storage # BTC Exchanges +$2.3M (-0.03%) Funding Rates Positive funding rates indicate traders are Bullish Aggregate +0.9762(0.0028) Binance +0.9949(-0.0123) Bitfinex -0.0233(-0.3391) Bitmex +1.0000(0.0000) ByBit +1.0000(0.0000) Deribit +0.3250(0.0317) Huobi +1.0000(1.0000) Kraken +1.6526(0.1161) Mean +0.9762(0.0028) OKex +1.1336(0.0550) Sentiment BMI : 34 (100.00%) Futures A positive spread between Futures Prices and Spot Prices is Bullish CME Price $69,860(2.68%) Spot Basis +$955(1.39%) Volume 245,420(98.58%) Open Interest 277,174(0.02%) Options all exchanges Higher open interest change in a bull market is bullish for the sector Volume 5,814(-2.42%) Open Interest 224,057 (1.24%) Vol. Put/Call Ratio 0.7084 (29.51%) OOI Put/Call Ratio 0.4655 (2.47%) All metrics as of 2024-06-03 16:11:47 All Funding rates are in bps Crypto Prices Symbol Market Cap Last Price Daily Change Year to Date Relative to BTC YTD BTC $1.36T $69,196 1.65% 63.84% ETH $455B $3,785 -0.27% 66.36% 1.54% SOL $76B $165 -0.20% 61.95% -1.15% DOGE $192,625 $0.0002 2.47% -99.78% -99.87% All prices as of 2024-06-03 11:50:57 Exchange Traded Products (ETPs) Symbol Prem. to Nav Last Price Daily Change Year to Date Relative to BTC YTD BITW -32.38% $37 -0.55% 58.15% -3.47% ETHE -0.90% $35 -0.20% 81.38% 10.71% News Quick Bits CoinDesk GameStop Stock, Meme Tokens Surge as User ‘DeepFu*kingValue’ Returns to Reddit Keith Gill posted his GameStop options positions on the r/superstonks subreddit. Market Data The Block Crypto investment products see $2 billion of inflows in May amid ‘turnaround’ in Ethereum sentiment: CoinShares Ethereum-based products saw their second consecutive week of net inflows totaling $33.5 million following spot ETF approvals on May 23. Regulation CoinDesk Mexico's Crypto Stance Unlikely to Change as Ruling Morena Party's Claudia Sheinbaum Elected President Mexico City’s former mayor Claudia Sheinbaum, fielded by the ruling Morena party, has been elected Mexico's first female president. CoinDesk Australia's First Spot Bitcoin ETF With Direct BTC Holdings to Go Live on Tuesday Australia-based Monochrome Asset Management's Monochrome Bitcoin exchange-traded fund (ETF) (IBTC) will begin trading on the Cboe Australia exchange on Tuesday, the company told CoinDesk. The Block Coinbase donates $25 million to crypto super PAC Fairshake Coinbase intends to assist pro-crypto candidates with a significant $25 million donation to Fairshake super PAC. Web 3.0 The Block Connext rebrands to Everclear, introduces a ‘clearing layer’ for intent-based bridges Connext, a blockchain interoperability platform, is rebranding to Everclear and developing a “clearing layer” for intent-based bridges. The Block Linea reaffirms decentralization plan after deliberately pausing block production amid Velocore hack Ethereum Layer 2 blockchain Linea said it plans to decentralize the network following a deliberate pause of its sequencer following Velocore's exploit.