BTC

ETH

S&P Futures 500

$28,383.00

$1,858.75

$4,132.25

(+1.39%)

 (-2.03%)

(+0.54%)

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

GM Treehouser 🌳

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March 2023 Market Recap

Our Daily View

What We Are Covering Today

  • China warns Taiwan of the consequences of the US stopover; Employment data shows signs of labor market slowdown (more in Macro & TradFi)
  • Arbitrum community seeks return of 700M $ARB tokens; Sushiswap’s exploit leads to $3.3M loss from 0xsifu (more in DeFi & CeFi)
  • The number of addresses holding over 1k ETH has reached a 2-year high of 6,620 as investors await the upcoming Shanghai / Capella upgrade on 12 April 2023 (more in On-Chain)
  • ETH skews flip into put premium; BTC downside protection in demand (more in Crypto Derivatives)
  • BTC and ETH price movements slightly diverge since last Thursday (more in Crypto Technical Analysis)

Macro & TradFi

Following a meeting between Taiwanese President Tsai Ing-wen and House Speaker Kevin McCarthy, China has sent a warning message to Taiwan. Specifically, China has sent an aircraft carrier toward Taiwan and launched live-fire exercises that could damage China's credentials as a global peacemaker. In fact, the dual imperatives of expressing anger over the U.S. stopovers and presenting China as a responsible global power have been on display over the past week. It is clear that China wants to be seen as a new global counterbalance to Washington, and its response so far suggests that leader Xi Jinping wants to keep his options open as he juggles other diplomatic priorities.

Meanwhile, the new US jobs market data showed a sign of a slowdown in March with employers adding 236,000 workers to the economy. While historically strong, this figure was the smallest gain in more than two years, according to the Labor Department. However, the unemployment rate dropped to 3.5%, with more workers returning to the job market, putting downward pressure on wages. The report has raised concerns that the economy may be cooling after showing strong growth at the beginning of the year. While steady employment growth could keep the Fed back on track to increase interest rates, it is also likely to allow them to consider a pause in its aggressive interest rate hikes after the May meeting due to the slower gains in wages.

Lastly, major US markets moved up on Friday with, the S&P 500, DJIA and NASDAQ up by 0.35%, 0.01%, and 0.75% respectively. On the treasury notes, 2-year and 10-year Treasury yields increased, with the former currently at 0.3949% and the latter at 3.383%.

DeFi & CeFi

  • SushiSwap approval contract exploited, leading to over $3.3M in losses
  • Gameta closes $5M seed round with participation from Binance Labs, Huobi Ventures, Arcane Capital and 7 others
  • Arbitrum community proposes AIP1.05, Arbitrum Foundation to return 700M $ARB to DAO Treasury
  • Parallel DEX launches on Injective
  • dYdX to wind down services in Canada
  • Trader Joe launches Liquidity Book V2.1, advises users to migrate liquidity over
  • Mt. Gox repayment window opens until October, repayments expected to take time
  • Mina announces its multi-year roadmap, breaking down into five main components
  • Camelot launches V2 upgrade with concentrated liquidity AMM and UI overhaul
  • Redacted unveils new stablecoin, called DINERO, backed by Ethereum blockspace
  • Restaking protocol EigenLayer launches testnet for stakers

Decentralized finance (DeFi) protocol SushiSwap's "RouterProcessor2" contract was exploited on Sunday, causing the loss of $3.3 million worth of Ethereum from the account of Crypto Twitter member Sifu. Security firm PeckShield flagged the issue and SushiSwap's head chef, Jared Grey confirmed it. The vulnerability was caused by a bug that occurred four days prior and involved a failure to validate access permissions during a swap transaction. SushiSwap CTO, Matthew Lilley, reported that several rescues were initiated to identify affected addresses and that exposure to RouterProcessor2 had been removed from the front end. Some of Sifu's stolen funds were recovered and the recovery effort was tracked by crypto service MetaSleuth. Meanwhile, SushiSwap head developer Jared Grey recommended that users who had interacted with the SushiSwap blockchain revoke all permissions granted to its contracts as a security measure.

Elsewhere, the Arbitrum community has proposed that the Arbitrum Foundation returns 700 million ARB tokens to its DAO Treasury after the foundation transferred the funds without community approval in March. The new AIP1.5 proposal states that the foundation should proceed with its budget plan only after returning the tokens, to show that governance holders control the DAO, not the Arbitrum service provider nor the Foundation. At the time of writing, 51.6% of voters supported the proposal, 46.2% opposed it, and 2.2% abstained.

On-Chain

According to @glassnode, the number of addresses holding over 1k ETH has reached a 2-year high of 6,620 as investors await the upcoming Shanghai / Capella upgrade on 12 April 2023. The previous 2-year high of 6,619 occurred on 07 April 2023. Despite the anticipated withdrawals by some validators, investors remain optimistic about the successful implementation of the upgrade and Ethereum's trading performance post-withdrawal.

Meanwhile, the Realized Price of ETH is at a 4-month high of $1,404.27, which indicates the on-chain resistance price. The Realized Price measures the average price weighted by the supply of what the entire market participants paid for their coins. It is calculated as Realized Cap divided by the total coin supply.

Crypto Derivatives

  • BTC and ETH funding rates remain positive
  • 30-day ATM IVs for BTC increased to 56.22% while ETH decreased to 57.18%
  • 30-day 25 delta call skew for BTC decreased to 0.63% while ETH flipped to put premium at -3.63%

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On

19.73%

ETH

DYDX

OKX

16.34%

XRP

OKX

BYBIT

11.94%

SOL

OKX

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

The futures market recorded $182.62M in liquidations over the past 4 days, with the majority coming from longs at $112.16.

In the options market, term structure for both BTC and ETH remains relatively flat as the IV across the curve for ETH fell. Since 5 Apr, skew for ETH has been trending towards put premium and over the long weekends, most of the short to long-term skews (7-day to 90-day) have flipped to put premium. 7-day RV continues to fall, hitting 35.45% and 42.18% for BTC and ETH respectively as price stayed muted over the weekends. Variance risk premium widened as RV falls, sitting at 23.29% for BTC and 22.1% for ETH. Put-call open interest ratio for ETH fell from 0.48 to 0.43 as the Friday 7 Apr contract expired.

On the flow side, BTC volume primarily comes from the end-of-week 14 Apr contracts as traders look towards the CPI data on 12 Apr.

Some noteworthy trades include the 5K ETH contracts of 28 Apr 1.6K/2.1K bull risk reversal being bought and 5K ETH contracts of 28 Apr 1.6K puts being bought.

As for BTC, downside seemed to be heavily in demand with 1.3K contracts of 28 Apr 26K puts being bought on Thursday alongside the 1.05K contracts of 28 Apr 26K put bought on Friday (@tradeparadigm).

Finally, the VIX fell to 18.4.

Crypto Technical Analysis

On the TA front, BTC has been mostly trading sideways since Friday, with the price range bound between $28.2K and $27.8K. However, in the early morning, BTC broke through the upper bound of the channel and bounced back from the $28.4K resistance level. The RSI on the 1H timeframe has also surged significantly and is currently sitting at 63.5. If the bullish momentum continues, the current price trend may be seen as a retracement from the bull rally, pulling back to between $28.15K and $28.25K (the 38.2% to 50% Fibonacci Retracement level) before breaking the $28.4K resistance level and continuing the bull rally. Alternatively, if the downward pressure continues, BTC may test the newly formed support zone at $27.8K before moving into the $26.7K support observed at the higher timeframe.

Turning to ETH, its price movements have diverged from BTC since Thursday, with the price bouncing off at the $1.83K level early this morning. Looking at the larger 1D timeframe, these movements could be summarized as a retracement from the 10% pump last Monday to Wednesday. If the bullish momentum is regained, ETH will likely test the upper trendline near the $2K level. However, BTC's influence as the market leader may present resistance and further downside is possible. In such a case, if ETH breaks the lower trendline, its price will likely test the $1.77K support zone.

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