BTC

ETH

S&P Futures 500

$27,534.75

$1,833.00

$4,161.50

(-0.83%)

 (-1.08%)

(+0.53%)

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

  • April sees a dip in US inflation to 4.9%, signaling effective Federal Reserve's tightening, while international tensions persist (more in Macro & TradFi)
  • Immense conflict stirs up the Paraspace team due to potential misuse of protocol funds; Tether releases Q1 assurance report, highlighting all-time high (ATH) excess reserve (more in DeFi & CeFi)
  • Litecoin network activities skyrocket; BTC median fees and pending transactions takes a breather (more in On-Chain)
  • Risk premium flips negative for ETH (more in Crypto Derivatives)
  • Price volatility shakes BTC and ETH, traders await clear direction in uncertain market (more in Crypto Technical Analysis)

Macro & TradFi

The US inflation rate dropped to an annual rate of 4.9% in April, the lowest level since April 2021 and beating the consensus of 5%, which reflects the impact of the Federal Reserve's tightening measures. This slowing inflation data gave a boost to investor confidence as major indices saw a decent increase with the S&P 500 rising by 0.44% and NASDAQ by 1.04%. The softer inflation data has also led to a weakening of the dollar against several Asian currencies, as market participants adjust their expectations for the pace of further Fed tightening. Yen added 0.2% to ¥134.07 per dollar and the Won gained 0.6% to 1,317.53 Won per dollar.

However, the international arena presents a different set of challenges. The ongoing dispute over sanctions between the US and China continues to cause friction at the highest levels of dialogue between the two nations. The inability of US Defense Secretary Lloyd Austin and China's new Defense Minister Li Shangfu to meet at the Shangri-La Dialogue security forum in Singapore in June signifies a potential barrier to diplomatic progress. This diplomatic tension, coupled with the US government's stringent stance on imports of Russian arms by China, could potentially lead to increased volatility in the markets. If left unresolved, these geopolitical tensions might spill over into trade and economic relations, potentially impacting global supply chains, commodity prices, and market stability.

Lastly, the U.S. government reported a $176 billion surplus in April, a 43% decline from a record surplus in April 2022, due to reduced revenues. Lower non-withheld individual tax receipts, reflecting reduced stock market capital gains in 2022, largely drove the decline. As the June 1 debt ceiling default deadline approaches, the robustness of May revenues will be crucial in determining if the U.S. will miss payment obligations.

DeFi & CeFi

  • US IRS files $44B claims against FTX and its subsidiaries
  • Tether releases its Q1 report, showing an ATH surplus reserve
  • Ordinal-based DEX BisoSwap announces deployment at BRC-20
  • ParaSpace Founder claims one multisig taken over by former employees amid serious internal conflicts
  • Zhu Su, co-founder of 3AC, obtains a restraining order against Arthur Hayes
  • Chiliz Chain, a sports and entertainment-focused layer 1, goes live on mainnet
  • Hong Kong’s OSL Asset Management gets license to invest in blockchain and Web3
  • Aragon cancels planned token holders control over $200M Treasury and the DAO
  • OpenSea Pro supports NFT purchase with $PEPE

Tether Holdings Limited, the company behind USDT – the largest stablecoin by market cap, has released its Q1 2023 assurance report audited by BDO Italia, one the top 5 independent public accounting firm. The report has shown Tether’s assets in clear breakdowns. Overall, the cash and cash equivalent component of Tether’s reserve has accounted for approximately 85% of Tether's balance sheet with the rest of the 15% split between relatively safe asset classes such as short-term corporate bonds, precious metals, BTC, overcollaterized loans, etc. The excess reserve has also reached ATH at $2.44B, a $1.48B increase from the previous quarter.

Meanwhile, ParaSpace, the largest NFT Fi protocol, has reported that over 50% of user funds have not been returned to the protocol following a hack in March 2023. Approximately $1 million USD equivalent has outflowed to various unknown wallets as well as out to CEXs and Circle redemptions. These funds were under the exclusive control and management of Yubo Ruan, CEO/CTO, and the team did not have access to or control over the protocol’s finances. As a result, the team has removed Yubo and any addresses not directly controlled by the team, and all user funds and assets are safe and inaccessible by Yubo. However, Yubo has refused to comply with the team’s requests to transfer all funds and NFTs to the ParaSpace multi-sig, turn over administrative control and access to all operational services, and step down from his roles as CEO and CTO. The founder, Yubo, retaliated through a tweet that a former consultant and another individual are illegally controlling one multisig and the official ParaSpace Twitter account, releasing unauthorized and unverified information which the ParaSpace team is working to resolve as quickly as possible.

On-Chain

For on-chain, transactions on the Litecoin blockchain reached record levels as the meme coin craze and high Bitcoin network fees drive users to seek alternatives. On May 10, Litecoin processed over 584,000 daily transactions, nearing Bitcoin's 667,000, marking a 5X increase from earlier this year and doubling the previous all-time high from January 2018. In addition to a record number of transactions, the number of active Litecoin wallet addresses also reached a new high of 832,000 on Wednesday, with nearly 691,000 new Litecoin addresses created in a single day recently.

Amidst the BRC-20 craze, BTC percentage of miner revenue from fees is gradually declining, currently standing at 24.23% after retracing from its peak. Median fees on the BTC network have also decreased, as the number of pending transactions appears to have slowed down in the past few days.

Crypto Derivatives

  • BTC and ETH funding rates remain positive
  • 30-day ATM IV fell to 47.08% and 47.32% for BTC and ETH respectively
  • 30-day 25-delta BTC skew flips to slight put premium at -0.03% while ETH put skew eased to -1.93%

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On

13.30%

ETH

BINANCE

DYDX

8.88%

SOL

BINANCE

DYDX

8.75%

LTC

OKX

DYDX

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

The futures market saw $188.75M in liquidation over the past 24 hours with the majority coming from longs at $117.79M.

The kink in near-term IV eased for both BTC and ETH term structures as the CPI print data came out to be largely in line with market expectations. The variance risk premium fell drastically to 2.24% for BTC and turned negative for ETH at -0.88% as both the near-term IV crunch post-CPI and the RV spike were a result of rumors that the US government sold 9.8K BTC.

On the flow side, majority of BTC volume came from the end-of-week puts. Looking closer at the open interests by strike price, the closest call with significant open interest has a strike price of $30K. Whereas for puts, the $28K put with significant open interest is current ITM.

Violent sell-off led to BTC downside purchase with 300 contracts of 12 May $28K puts and 176 contracts of 12 May $26.5K puts (@tradeparadigm).

Lastly, VIX fell slightly and closed at 16.94.

Crypto Technical Analysis

In the daily chart, BTC has been consolidating within a tight range of $26.6k and $29.9k for several weeks, indicating a period of sideways movement. It's worth noting that the key support area between $26.6k and $27.1k has been holding strong, despite the FUD surrounding the US Government-controlled wallet and their plans to sell large amounts of BTC valued at $264 million which has caused a wick down last night. BTC closed with a doji candlestick, signaling indecision in the market. The bullish momentum remains intact as long as the support area continues to hold. Traders are now watching closely at the Head & Shoulders pattern on the daily chart. A breakdown below the $26.6k to $27.1k support area would have bearish implications, potentially leading to a rapid decline toward the next support level at $25k.

Moving on to ETH, we see a similar pattern of indecisive price action. The support area around $1.8k has shown significant strength, with a quick rejection of the price dip to that level last night. Following the release of inflation data yesterday, ETH has traded to a high of $1.88k and back down to $1.79k, forming a doji candlestick on the daily. As with BTC, the overall bias for ETH remains bullish should the support area holds.

Access institutional-grade commentary on TradFi × Crypto markets

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Treehouse Research 🌳