🌳 China Manufacturing Activity Shows Signs Of Rebound; SBF Is Going To Prison For 25 Years

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Our Daily View

What We Are Covering Today

• China manufacturing activity shows signs of rebound; Sentiment among Japan's service-sector firms reaches 30-year high (More in Macro & TradFi)
• Sam Bankman-Fried sentenced to 25 years; Prisma Finance loses $12M in DeFi exploit (More in DeFi & CeFi)
• Solana ecosystem experienced huge growth; ETH holders at a record high of 112.23M (More in On-Chain)
• BTC's ATM IV diverges; 25-Delta skew shows optimism for near-term growth (More in Crypto Derivatives)
• Both BTC and ETH form a rising triangle pattern on the technical charts (More in Crypto Technical Analysis)

Macro & TradFi

China's manufacturing activity exhibited a rebound in March, reversing five months of decline. China’s Manufacturing PMI expanded in March for the 1st time since September to 50.8, up from 49.1. The Non-Manufacturing PMI also came in higher than expected at 53.0, up from 51.4. The recently released figures suggest that China's robust manufacturing sector could potentially serve as the driving force propelling the government towards achieving its annual growth target of approximately 5% for the current year. However, the government still faces numerous additional challenges, including a crisis within the property market, declining consumer confidence, and heightened geopolitical tensions. Given that President Xi Jinping recently met with a group of American business leaders to restore confidence in the economy and keep relations with the US on a stable footing, this increase in manufacturing activity underscores the unrealized potential for growth in China and seeks to improve investor confidence.

In other news, sentiment among Japan's leading service-sector firms has reached its highest level in over thirty years. Japan’s positive outlook contrasts with a slight decline in confidence observed among manufacturers. Overall, this paints a largely optimistic picture for the Japanese economy, as the central bank deliberates its upcoming policy decision. The Bank of Japan's (BOJ) latest Tankan report, released on Monday, reported that the sentiment index for the country's largest non-manufacturing companies surged to 34 in March, surpassing analyst expectations and marking the highest level in over three decades. This positive trend contrasts with a slight decline in the sentiment gauge for major manufacturers, which dipped to 11 in March from a December reading of 13 (adjusted for a new baseline). The consensus estimate from economists for this gauge was 10. The decline in manufacturing sentiment can be partially attributed to the repercussions of recent scandals involving some vehicle manufacturers which disrupted production at several of the nation's leading automakers. However, for investors, this could be a temporary setback as Japan’s economic fundamentals are relatively unchanged. Looking forward, the Tankan survey is considered one of the most critical datasets compiled by the BOJ. 

The Dow Jones Industrial Average led the gains in U.S. stocks, increasing by 0.12% to close at $39.80K. The S&P 500 followed suit, rising by 0.11% to $5.25K, while the Nasdaq Composite decreased by 0.12% to $16.37K. Estee Lauder shares gained over 6% yesterday to close at $154.30 after Bank of America Securities analyst Bryan Spillane upgraded the stock’s rating to Buy from Hold and raised the price target to $170 (10.3% upside) from $160. Their focus on innovation and efforts to reduce reliance on sales in China and the travel market catalyze future growth. Carnival Corp, a leisure travel company, was set back by 4.94% to close at $16.34. Even with cruise operators recording higher demands as more travelers opt for cost-effective seafaring vacations as a substitute for pricier land-based travel options, they are still negatively affected by rerouting ships in the Red Sea region, higher fuel prices, and currency exchange rates.

CeFi & DeFi

• SBF is going to prison for 25 years
• Prisma Finance exploited for $12M
• Ethereum reaches 1M validators, community thinks it’s ‘too much’
• Prominent short-seller Citron targets Coinbase stock after exchange outage
• Solana Foundation says it can filter through offensive memecoins

Sam Bankman-Fried, the former CEO of FTX, has been sentenced to 25 years in prison by Judge Lewis Kaplan of the United States District Court for the Southern District of New York. The conviction on seven felony charges marks the first prison sentence for an individual associated with the collapse of the cryptocurrency exchange FTX and Alameda Research in November 2022. In addition to witness tampering and perjury, Kaplan highlighted Bankman-Fried's evasion and dishonesty during the trial. The judge noted the gravity of the crimes, pointing out the significant losses incurred by investors, lenders, and customers totaling approximately $11 billion. Despite Bankman-Fried's expression of regret and his legal team's defense portraying him as a non-malicious, mathematically driven individual, the court rejected these arguments, emphasizing the lack of acceptance of responsibility and the irrefutable impact of his actions on victims.

Elsewhere, Prisma Finance, a DeFi platform known for issuing stablecoins backed by Ethereum liquid staking and restaking tokens, suffered a significant security breach resulting in a nearly $12 million loss. The aftermath saw the protocol's PRISMA token plummet by 30%, although it later managed to recoup some of its losses, stabilizing at a market capitalization of $9 million. This security breach prompted a massive withdrawal of nearly $110 million from Prisma, diminishing its total value locked (TVL) to $127 million. Despite the exploit, Liquity, an associated protocol to Prisma, confirmed its immunity to this specific type of attack, highlighting the nuanced vulnerabilities within the DeFi ecosystem and the ongoing challenges in ensuring protocol security.

On-Chain

The Solana ecosystem witnessed significant growth in activity over the weekend, with tokens representing the network like $WIF and $JUP gaining 8.9% and 7.9% respectively. The native token, Solana, also breached the key psychological price barrier of $200, representing a continued rally in its ecosystem. Given the recent uptick, traders should be wary and look at the fundamentals of these projects to make sense of the developments.

Elsewhere, Santiment's analysis revealed that Ethereum's price exhibited a significant upswing this weekend, surpassing the $3,600 mark. This upward movement comes after a price decline of up to 25% experienced between March 11th and 19th. Notably, the number of Ethereum addresses holding coins has reached a new all-time high of 118.23M. Additionally, mid-term MVRV dipped into negative territory, suggesting a mildly bullish signal. The increase in both price and holders after a period of decline could be potential signs of whale traders realizing their profits. Still, the demand from retail investors outweighs the selling pressure, resulting in both price appreciation and increased holders.

Crypto Derivatives

• Funding rates remain positive for both BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH remained relatively unchanged at 76.65% and 80.73% respectively.
• The 30-day 25-delta skew (C-P) for BTC and ETH rose sharply to 3.22% and -0.72%, respectively.
• The futures market witnessed $106.28M in liquidations, with longs representing 70.01%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

The Bitcoin (BTC) ATM Implied Volatility (IV) chart reveals a sustained divergence, with 7-day maturities at 68.51% and 30-day maturities slightly higher at 75.85%, marking a slight increase from the previous week. This divergence is likely influenced by the anticipation of upcoming economic indicators such as Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings data set to be released this Friday. Furthermore, the stabilization of the 30-day IV suggests that the market is positioning itself in anticipation of the Bitcoin halving event in April, while closely monitoring Bitcoin's performance at current support and resistance level.

Bitcoin term structure continues to illustrate a pronounced contango shape, with minimal changes across the curve. This phenomenon indicates investors' expectations for an upward price trajectory in Bitcoin, underlining the optimistic outlook on its value over time.

The convergence observed in today's BTC 25-Delta skew chart between the 7-day and 30-day skews points to an emerging consensus in market sentiments for the near and longer terms. Specifically, both skews indicate that traders are positioning themselves for potential upward movements in BTC. There is likely a heightened anticipation of positive price action in the short term, reflecting traders' strategic adjustments to recent market developments and their optimistic outlook on BTC’s price trajectory.

Lastly, @Paradigm's option flows last week, showcased strategic defensive plays and structured deals. For BTC, key transactions included a significant buy of 1000x 26-Apr-24 68k Puts and an acquisition of 850x 26-Apr-24 70/85k Call Spreads. In the ETH arena, a massive 15777x 26-Apr-24 31/26k Put Spread was purchased, along with a sizable 9000x 26-Apr-24 3k Put buy, reflecting a cautious stance amid volatile market conditions.

Crypto Technical Analysis

While BTC has largely exhibited sideways movements over the weekend, a rising triangle pattern has seemingly formed, characterized by constant resistance on top and rising local lows. As such, high volatilities can be expected as we approach the apex of the triangle. If the triangle is broken above, the immediate resistance lies at the $74K level as price re-tests for a new all-time high. Meanwhile, a break below may send the price to the $69K level, which previously acted as long-term resistance-turned-support, before testing the support at the lower trendline situated at roughly $66.5K to $67K, representing an approximately 6.5% downside. RSI, on the other hand, while still within the neutral territory, is oscillating at the higher range nearing the overbought zone.

On the other hand, ETH has similarly formed a triangle pattern and is currently approaching the apex, awaiting a definitive breakout. As such, the immediate support lies at the lower trendline, which also serves as the lower boundary of the triangle mentioned above, at roughly $3.55K. If this level fails to hold, the price may decline to the local low at roughly $3.15K, representing a 12.7% potential downside. On the flip side, if the price breaks above this triangle pattern, no immediate resistance is seen before the local high, situated at roughly the $4K zone, signaling an 11% potential upside if this trend materializes.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Fed must get 'more aggressive' with rate cuts due to jobs trouble, Canaccord's Tony Dwyer says.

• China Factory Activity Expands for First Time in Six Months

• Samsung says it needs to 'redefine' its voice assistant Bixby with generative AI upgrade.

• As 'guilt tipping' gets out of control, consumers start pushing back

• Baltimore Ship Accident Has East Coast Ports Scrambling to Absorb Cargo

• AT&T is investigating a leak that put millions of customers' data on the dark web

• Companies rush to issue bonds to forestall US election volatility

• Huge AI funding leads to hype and ‘grifting’, warns DeepMind’s Hassabis

• Turkey’s big cities deliver blow to Erdoğan with wins for opposition mayors

• Biggest rally against Netanyahu since start of war held in Jerusalem

• Shein profits double to over $2bn ahead of planned listing

• Gold Rises to Record as Cooling US Inflation Aids Rate-Cut Bets

• BOJ’s Stash of Bonds Is Set to Shrink for First Time Since 2008

• Japan Faces Risks From US, China Economies, Banking Head Says

Crypto

• SBF Is Going to Prison for 25 Years

• Solana Foundation Says It Can Filter Through the Offensive Meme Coin Problem

• Craig Wright Assets Frozen by UK Judge to Prevent Him Evading Court Costs

• Ethena’s Prelaunch Futures Surge 22% as ENA Token Is Set to Go Live Next Week

• Binance Executives File Suit Against Nigeria: Local Media

• Protocol Village: Horizen Team Deploys Proof Verification Chain to Testnet

• Tornado Cash Dev Roman Storm Moves to Dismiss Indictment Over Crypto-Laundering Allegations

• SEC’s spot Ether ETF concerns unfounded, Consensys asserts

• Sphere 3D’s legal issues escalate as Gryphon seeks to block $10M

• Grayscale introduces crypto investment fund that prioritizes staking rewards

• US court favors Fed in Custodia Bank case, rejects appeal for review

• Unexplained transfers on LENX protocol spark rug pull concerns

• CFTC commissioner warns against infringing on SEC’s authority in KuCoin case

• Web3 dev platform Mirror World launches first gaming rollup chain on Solana

• Telegram Mini Apps are ‘Trojan horse’ for mass blockchain adoption — TON investments director

• Prisma Finance hacker defends exploit, demands public apology

Deal Flow

• First deal closes on crypto angel investing platform Echo, raising $300,000 for Ethena

• Paradigm’s funding takes Farcaster’s dev to unicorn status

Yours sincerely,
Treehouse Research 🌳