BTC

ETH

S&P Futures 500

$29,100.80

$1,848.90

$4,582.25

(-3.04%)

 (-1.98%)

(+0.41%)

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

  • Chinese leaders disappoint investors seeking major stimulus; FDIC warns banks against manipulating deposit figures after SVB’s collapse (more in Macro & TradFi)
  • Worldcoin launched its ecosystem token; Russia established its Digital Ruble (more in DeFi & CeFi)
  • Recent surge in whale BTC-denominated inflow volume; supply divergence between whale cohorts termed ‘whale reshuffling’ (more in On-Chain)
  • IV bleeds lower amid market selloff; BTC flows indicate positive long-term outlook (more in Crypto Derivatives)
  • BTC and ETH plunge into the red before US opens on Monday; ETHBTC attempts to break above descending trendline (more in Crypto Technical Analysis)

Macro & TradFi

China's top leaders, including President Xi Jinping, indicated their support for the struggling real estate sector and plans to boost consumption while addressing local government debt. However, the recent meeting failed to announce significant stimulus measures to aid the slowing economic recovery. The readout suggested a "counter-cyclical" policy and possible adjustments to property sector restrictions. The focus on fiscal and monetary policy loosening was absent, disappointing some investors. Despite expectations, the government refrained from implementing a large-scale stimulus, with analysts noting the need for concrete steps to have a sustained impact on the market.

In other news, following the financial trouble faced by Silicon Valley Bank, many banks attempted to revise their deposit numbers to decrease the reported portions of uninsured deposits. The Federal Deposit Insurance Corp. (FDIC) warned U.S. banks against taking liberties with deposit figures. Bank of America and Huntington National Bank significantly revised their uninsured-deposit numbers. Since Silicon Valley Bank's collapse, 47 banks restated their Dec. 31 uninsured-deposit figures, lowering them by $198B. Some banks attempted to include unusual types of accounts as insured by the FDIC, resulting in lower uninsured-deposit figures. The FDIC emphasized that collateral had no bearing on deposit insurance, and only insured deposits could be labeled as such. The revised numbers could impact special assessments imposed by the FDIC.

Yesterday, the U.S. equities market saw a positive performance. DJIA closed at 35,411.24, up by 0.52% from the previous close. The S&P 500 index also rose, closing at 4,554.64, up by 0.40%, while the NASDAQ increased by 0.19%, closing at 14,058.87. Later this week, the Federal Reserve and the European Central Bank (ECB) will hike rates again, yet as the news is public, markets have already priced in this hike and taken it in stride.

DeFi & CeFi

  • Worldcoin, WLD, launches on mainnet, currently valued at $2.13 per token
  • Putin approves digital Ruble, as Russia prepares for crypto exchange trial run
  • Arkham awards bounty to sleuths who allegedly found Do Kwon's crypto wallets
  • Vitalik Buterin recognizes the necessity of proof-of-personhood solutions like Worldcoin
  • Telegram trading bot Unibot captured more fees than BSC and MakerDAO
  • Blockchain startup Cymbal closes $18.5 million funding round

Worldcoin, a venture co-founded by OpenAI CEO Sam Altman, announced the launch of its ecosystem token yesterday. The value of the native token, WLD, spiked above $2.50 within an hour of its launch, translating to a $25B Fully Diluted Valuation. Worldcoin remains committed to addressing income inequality and digital identity verification. The initiative, launched on March 14, aims to create a global digital passport named World ID, stored on users' phones, offering a solution to authenticate online identities without needing personal information. The gas-free crypto wallet for human-verified users, released on May 8, enables gas-free transfers upon registering a World ID. The wallet ensures User data privacy via zero-knowledge-proof technology. Numerous cryptocurrency exchanges, including Binance, Bybit, OKX, Gate, and Huobi, have announced their listing as the token goes live.

Elsewhere, Vladimir Putin has ratified a law establishing a central bank digital currency (CBDC), the Digital Ruble, which will serve as the third form of payment in the country, alongside cash and non-cash Rubles. The Central Bank will oversee the infrastructure and custody of all assets for the new digital currency. While individual transactions with the Digital Ruble will be free, businesses will incur a 0.3% fee. The Bank of Russia's Governor, Elvira Nabiullina, emphasized the voluntary nature of the Digital Ruble's use, expressing hope for it to be a convenient and cost-effective solution for individuals and businesses. Furthermore, Russia has approved the creation of crypto exchanges under an experimental legal regime for two years, emphasizing the necessity of local legislation for using cryptocurrencies with external partners.

On-Chain

During the recent market rally, whale inflow volumes to exchanges surged significantly, reaching +16.3k BTC/day, representing 41% of all exchange inflows. This dominance is comparable to past events such as the LUNA crash and FTX failure. Whale-to-exchange net flows have typically oscillated between ±5k BTC/day over the past five years, but since June and July this year, there has been a sustained elevated inflow bias of 4.0k to 6.5k BTC/day. This behavior is divergent from the rest of the market's modest outflow bias. Notably, around 82% of whale inflows were sent to Binance, indicating an extraordinary uptick in Binance dominance over the last 12 months.

According to Glassnode, over the past 30 days, there has been notable divergence within the whale cohort, with whales holding >100K BTC increasing their balance by +6.6k BTC, while whales with 10k-100k BTC reduced their balance by -49.0k BTC, and 1k-10k whales saw an increase of +33.8k BTC. Despite extreme values in the Trend Accumulation Score, there was a net reduction of just -8.7k BTC across all whale groups, suggesting a relatively neutral stance in recent months. This trend of seemingly contradictory movements indicates a phenomenon called 'Whale Reshuffling,' where whales may be moving funds internally.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH
  • Deribit Implied Volatility Index (DVOL) fell to 38.19% and 37.06% for BTC and ETH respectively
  • 30-day 25-delta skew (C-P) for BTC and ETH is at 1.16% and -1.38% respectively
  • The futures market witnessed $147.68M worth of liquidations on Monday with longs representing 88.7% of the total

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On

28.68%

SOL

OKX

dYdX

23.97%

ETH

Bybit

dYdX

22.03%

DOGE

Binance

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


BTC traded sideways for most of the session yesterday, but around 10 AM UTC, it experienced a sharp sell-off, resulting in a 2.8% drop for BTC and 2% for ETH. The altcoin market also witnessed aggressive selling, leading to a rise in liquidations and higher intraday IV. However, the markets quickly calmed down, and IV collapsed, with DVOL closing lower than yesterday’s open.

The term structure remains contango, with IV slightly declining for shorter and mid-tenors. Short-expiration IVs are marginally higher at the beginning of the week as the market anticipates more volatile trading amid a busy week of earnings in the US stock market. BTC's IV continues to trade higher than ETH across the curve. This phenomenon was observed since the start of the regional banking crisis, followed by positive anticipation of approving a spot Bitcoin ETF filing, which sparked a haven bid in BTC primarily due to call flows.

The 7-day skew (C-P) for short tenors slipped deeply to put skews yesterday, driven by the violent selloff in the crypto markets. Traders quickly shifted sentiment and piled up preferences for puts as a protection measure. However, longer-term tenors were relatively unaffected. The 30-day skew on BTC remains positive, reflecting market participants' optimism about BTC as a haven bid and their anticipation of potential spot Bitcoin ETH approval. On the other hand, ETH skew became increasingly negative across all tenors, indicating it is seen as a higher-risk play due to the slow bleed in the crypto markets over the past weeks, leading to a preference for puts.

According to @paradigm's data, the top BTC structures were predominantly bullish positions, indicating that BTC holders were relatively unaffected by the short-term price action. These positions mainly consisted of outright calls, call spreads, and calendars. Notable trades included the purchase of 275x 4-Aug-23 $30K Call, 225x 25-Aug-23 $34K / 29-Sep-23 $34K Call Calendar, 200x 11-Aug-23 $30K Call, and 200x 4-Aug-23 $30K/$32.5K Call Spread.

Crypto Technical Analysis

Before the US trading session opened on Monday, BTC witnessed a significant 3% decline but managed to hold above the $29K support level. The current situation suggests that BTC might attempt to retest the $29.6K support turned resistance level. Alternatively, BTC could move lower in a bearish scenario, aiming to reach its June open. An examination of the daily chart reveals a distribution phase over the past few weeks, centered around the $30K to $31K range. Despite numerous attempts, BTC could not find strong acceptance above the $30K level and has subsequently deviated below it.

ETH followed a similar trajectory as BTC, experiencing a price plunge ahead of the US market opening. Presently, on the daily chart, a descending channel is visibly taking shape, with recent price peaks occurring near the $2.03K mark. If ETH's downtrend persists, prices will likely trend toward the channel's middle range. If that fails to hold, a large-scale downside movement toward the lower range of the channel could be in store over the coming weeks.

Lastly, on a relative basis, BTC experienced a notably more aggressive sell-off than ETH, leading to a slightly higher surge in ETHBTC towards the descending trendline. Presently, ETHBTC is making efforts to breach this descending trendline. If a successful breakthrough occurs, we will likely witness a rotational shift towards ETH as BTC's relative strength in the market diminishes.

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Treehouse Research 🌳