BTC

ETH

S&P 500 Futures

$22,988.50

$1,655.25

$4,136.50

(-1.53%)

 (+1.98%)

(-0.83%)

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

GM Treehouser 🌳

Welcome to our Treehouse Daily newsletter (previously known as The Canopy Collective), where Treehouse brings you financial news and insights free daily! We believe you’ll find this helpful.

In case you have missed it, check out our latest research piece 👇


Our Daily View

What We Are Covering Today

  • Risk assets repriced on Fed’s warning on higher terminal rates (more in Macro & TradFi)
  • AI crypto tokens soared 65.6% in the last 7 days; Frax founder confident that $FRAX stablecoin will gain adoption from the Fed (more in DeFi & CeFi)
  • BTC realized profit is on the rise (more in On-Chain)
  • 170K+ contracts of ETH call options expiring this week (more in Crypto Derivatives)
  • Both BTC and ETH were trading between prior ranges with new resistance levels (more in Crypto Technical Analysis)

Macro & TradFi

Risky assets are repricing with the Fed’s reiteration of higher terminal rates as more officials including Waller, Williams, Cook and Kahkari voiced for a longer rate hike cycle. US Treasury bonds were helped by a strong 10-year notes auction and traded 4bps tighter overnight, taking the entire curve tighter as well. Major US stocks traded lower with NASDAQ down 1.42%, SPX down 0.82% and DOW down 0.31%. Tech shares were weighed down by a slump in Alphabet shares. Futures are indicating lower opening for Asian shares as well.

DeFi & CeFi

  • Aptos Labs invests in social media app Chingari
  • Aptos Labs plans network upgrade and revise current tokenomics
  • Osmosis holders are able to receive Prism airdrop by delegating to Prism’s Osmosis validators
  • Chiliz’s announce the launch of its EVM-compatible L1 blockchain
  • Moralis launch support for Aptos, Aptos devs will be able to use Moralis’ suite of APIs
  • Cardano TVL doubled, largely due to release of $DJED stablecoin
  • CryptoSlate AI index up by 65.6% in the past 7 days, with the Graph being classified as one
  • NFT project Pudgy Penguins launches Soulbond Token with Sotheby’s
  • Canto to supplement the mainnet faucet for new users onboarding
  • Frax founder Sam Kazemian reveals that $FRAX stablecoin will one day be fully backed by Federal Reserve Master Account

In a recent podcast interview, Sam Kazemian, the founder of the Frax protocol, announced that the stablecoin $FRAX will be fully backed by the Federal Reserve Master Account in the future. A Fed Master Account refers to a bank account held with one of the Federal Reserve's 12 regional branches and is a direct deposit with the Federal Reserve. When asked about the regulatory implications of this change, Sam expressed confidence and stated that securing regulatory approval is the top priority for Frax in the current year.

Currently, $FRAX is a partially algorithmic stablecoin, with a small portion of its backing coming from the Frax protocol's native token $FXS and $USDC. Due to widespread concerns about algorithmic stablecoins, the algorithmic component of $FRAX has been significantly reduced to only 8%.

Meanwhile, JPMorgan has confirmed that artificial intelligence (AI) is the top trend this year. In a recent survey of 835 institutional traders, 53% of respondents cited AI as the technology most likely to shape finance in the next three years. Blockchain and distributed ledger technology ranked third on the list. AI-related stocks have been performing well, and there is also a growing market for AI-linked cryptocurrencies, with an index of 73 AI-linked tokens showing a 65.6% increase in the past seven days. The hype around AI started when OpenAI's ChatGPT attracted attention for its impressive capabilities, including writing smart contracts and composing poetry, and has even threatened Google's monopoly on search. This has led to Microsoft investing $10 billion in OpenAI last month. Meanwhile, Google has responded to OpenAI's challenge with its own AI chatbot, Bard, which is expected to be rolled out across Google's technology suite in the near future. The crypto market is also looking to take advantage of the opportunity presented by AI, with platforms such as Alethea and Fetch.ai offering alternatives to Microsoft and Google. However, the high prices of AI crypto tokens are causing concern as the use case of AI crypto remains thin and actual product market fit is still unclear.

On-Chain

Yearn Finance had 2 YFI transactions, totaling $59.6M of outflow, the largest transactions in 3 months.

BTC realized profit is increasing as a result of the recent increase in BTC price from approximately $16K to 24K. Although this is a hint of a regime transition, profitability remains at around the 2020 levels.

Crypto Derivatives

  • BTC and ETH funding rates remain positive
  • 30-day ATM IV fell to 48.0% and 61.2% for BTC and ETH respectively
  • 30-day 25d call skew fell to -0.86% and -3.54% for BTC and ETH respectively

Top 3 CEX USDT perp funding rate arbitrage based on last 24-hour lookback:

Net Annualized APR

Perp (USDT pair)

Long on

Short On

18.88%

ETH

BYBIT

DYDX

11.28%

SOL

OKX

DYDX

10.95%

BNB

BINANCE

BYBIT

Source: @CexyArbBot Telegram

1) Pairs observed include BTC, ETH, SOL, BNB, XRP, LTC, DOGE vs USDT perps 

2) CEX observed include Binance, Bybit, OKX & DYDX

@CexyArbBot allows you to customize CEX, 100+ pairs & lookback periods combo

For futures, total liquidations in the past 24H amounted to $90.7M, majority coming from longs at 62.1M.

On the options front, ETH flipped to contango whilst its far-dated IV remains relatively flat. Variance risk premium decreased to 8.71% and 8.42% for BTC and ETH respectively as near-term IV falls. Volume of put-call ratio continues to fall for BTC and is at 0.39 currently, below its open interest put-call ratio of 0.41.

On the flow front, volume seems to be spread out between near-dated and far-dated options. Something noteworthy would be the 31.6K call contracts expiring 9 Feb and 146.9K call contracts expiring 10 Feb – strike prices mainly concentrated between $1,650 to $1,750. The 2 top strategies are the bear call spread and bull call spread, both equally matched.

Lastly, the VIX rose by 5.2% to 19.63.

Crypto Technical Analysis

Onto TA, BTC continues to trade sideways with further validation of the $22.6K support zone on the 4H level. In addition, price movements yesterday validated a small resistance zone on the 22.3K level. The same trend can be observed on the daily timeframe. As such, the previous thesis holds which indicates the potential resistance and support levels at 24.25K and 20.8K respectively if we were to break this trading range. RSI has also decreased further to a level of 60.1.

As for ETH, it continues to be traded within the channel’s range at both the 1D and 4H timeframe. However, the bullish rally at the shorter timeframe was rejected at the 1.67K level, forming another potential resistance zone. Similarly, the prior thesis still holds that the price could either trend towards the 1.76-1.78K daily resistance zone or the 1.54-1.55K support zone if ETH breaks the current trading range.

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Yours sincerely,
Treehouse Research 🌳