🌳 Chinese Premier Brushed Aside Worries From Investors About Economic Concerns; BlackRock Sees Little Demand For Ethereum

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• Bond Markets Resume Rate-Cutting Trades Worldwide; Chinese Premier brushed aside worries from investors about economic problems (More in Macro & TradFi)
• Blackrock sees “little” interest in ETH compared to BTC; Polygon zkEVM resumes its operations after 10 hours of downtime (More in DeFi & CeFi)
• Base network gas fees surge post-upgrade; ZachXBT tracks down Ethereum thief's activities (More in On-Chain)
• 7-day IV and 30-day IV exhibit a consolidating trend; BTC term structure maintains a contango shape (More in Crypto Derivatives)
• BTC and ETH show consolidation; traders watch for market direction signals (More in Crypto Technical Analysis)

Macro & TradFi

The Chinese Premier brushed aside investors’ worries by addressing economic issues related to risks in China's property sector and local government debt. He stated that the government in Beijing is actively taking measures to stimulate growth and address significant risks within the system, emphasizing the ample scope for macroeconomic policies to expand, given the relatively low consumer price growth. Additionally, he underscored that the government's debt level remains manageable. Premier Li mentioned a few initiatives the government is rolling out this year to crank up domestic spending. These include tearing down walls between different parts of China's market to make it one big, unified system, granting city residency rights to folks who've moved from rural areas to cities, and launching a campaign to get consumers and businesses to upgrade their old appliances and equipment. Investors should look out in the longer term regarding how these play out for China’s overall economy.

In other news, recent rate cuts by Switzerland and dovish signals from central banks like the Federal Reserve, Bank of England, and European Central Bank suggest that investors may be looking to position for a looser monetary policy again. The possibility of interest rates decreasing has made bonds maturing in five years or less more attractive as shorter-term bonds are expected to benefit the most if central banks cut rates. Simultaneously, this outperformance by shorter-term bonds led some investors to bet on the idea that the yield curve will return to its normal shape, where interest rates are higher for longer maturities as there's still a risk that central banks might not cut rates as much as some investors expect, especially if inflation stays high and unemployment remains low.

Despite U.S. stocks witnessing gains over the weekend, the S&P 500 Index and Dow are down 0.14% and 0.77% respectively, with the Nasdaq Composite increasing by 0.16%. Moving on to the day's trading, FedEx Corp surged by 7.35% over the weekend as Jim Cramer lists it on his watchlist while NVIDIA Corp increased by 3.12% as its AI ambitions in medicine and healthcare are becoming clear.

CeFi & DeFi

• BlackRock Seeing Only 'A Little Bit' Demand for Ethereum
• Polygon zkEVM is down due to issues with the blockchain sequencer
• Floki Inu roadmap reveals plans for regulated bank accounts
• FTX to offload $1B Anthropic stake to pay off bankruptcy debts
• RippleX addresses XRP ledger’s AMM pool error, advises user caution

According to Robert Mitchnick, the head of digital assets at BlackRock, the asset management giant's clients are showing "a little bit" of interest in Ethereum compared to Bitcoin, which remains their overwhelming focus. Mitchnick made these remarks during a fireside chat at the Bitcoin Investor Day conference in New York, highlighting that demand for every other crypto asset besides Bitcoin and Ethereum is "very, very little." He also addressed the misconception within the crypto industry that BlackRock will offer a wide range of crypto-related services, emphasizing that their primary focus is on Bitcoin. 

In other news, the Polygon zkEVM Ethereum Layer 2 blockchain encountered a significant downtime event on March 23, lasting over 10 hours, during which new blocks were not successfully sequenced. This outage, acknowledged by the Polygon zkEVM officially, was attributed to an issue with the sequencer due to a Layer 1 reorganization. However, the outage did not impact Polygon's main blockchain or chains developed with Polygon's Chain Development Kit (CDK), and the company intends to release a second-generation zkEVM soon. A detailed post-mortem is also planned to address the root causes of the downtime.

On-Chain

The surge in Base Memecoin's popularity has led to a spike in Base network's gas fees, surpassing levels seen before the Dencun upgrade and raising questions about the upgrade's efficacy, according to the data provided by Dune user @oplabspbc. This increase is primarily attributed to automatic trading bots raising priority fees for arbitrage, as noted by analyst @MSilb7, highlighting the ongoing challenge of balancing network efficiency with high-traffic scenarios.

Meanwhile, ZachXBT reported a sequence of events following a theft. The thief, Jolan, initiated the laundering of the stolen ETH by using Orbiter Finance to bridge it to Ethereum, then to Solana through Mayan Swap & Allbridge. Jolan openly admitted to controlling the stolen assets on X/Twitter, showing no remorse before deactivating his account. Subsequently, Jolan converted $536K of the stolen funds back to Ethereum, investing approximately $161K in Milady and its derivative NFTs and engaging in meme coin trades worth over $140K. ZachXBT further identified Jolan's location in France and additional personal details through a phone number associated with his Telegram account, searched in private databases.

Crypto Derivatives

• Funding rates remain positive for both BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH consolidating at 72.49% and 75.40%, respectively.
• The 30-day 25-delta skew (C-P) for BTC increased slightly to 2.16% while ETH declined slightly to -1.92%.
• The futures market witnessed $160.15M in liquidations, with shorts representing 59.8%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Bitcoin (BTC) ATM Implied Volatility (IV) chart indicates a consolidating trend between the 7-day and 30-day maturities, currently at 67.23 and 71.20 respectively. This suggests that both short-term and mid-term volatility expectations have eased as the price of BTC shows a similar sentiment in trading sideways with the lack of market impetus over the next 30 days. This poses potential volatility for traders in anticipation of more significant price fluctuations over the short to medium term.

The term structure for BTC has retained its contango shape with volatility in short-term expiries of up to 4 days while longer-term tenures are relatively stable. This pattern suggests that traders expect more stability in Bitcoin's long-term price, with uncertainties and potential price movements in the short term.

Today's BTC's 25 Delta skews illustrate an increase in 7-day and 30-day constant maturities compared to last Friday, sitting at -1.05 and 2.21 respectively. Both the 7-day and 30-day skew are trending upwards although the former is still in negative territory, looking to converge with the 30-day skew if the skew persists. This shows that market sentiment among traders remains negative in the short term but is transitioning towards a more positive outlook in the medium term 

In today's trading session, @Paradigm reported notable trades of 480x BTC 29-Mar-24 68K Straddle and 400x 26-Apr-24 66K Call Bought. For ETH, significant moves included a 2750x Call 29-Mar-24 at $3.25K put and a 2500x 29-Mar-24 3.8k/3.6K/3.4K Put Butterfly Spreads bought.

Crypto Technical Analysis

In technical analysis, BTC’s price currently oscillates around the $66K level, which has been relatively constrained within a tight range, hinting at consolidation after the recent rally. A decisive move beyond this juncture could see the next level of resistance at approximately $72K, marking an approximate 9% increase from the current price. Inversely, should the price break below the present support, the subsequent floor is anticipated at around the $60K area, reflecting a potential 9% retracement from the prevailing levels. The RSI is currently positioned at 57.94, displaying a neutral momentum without immediate signs of overbought or oversold conditions at this time. The market awaits a catalyst for the next significant move, with traders monitoring key levels for signs of either a bullish continuation or a bearish reversal.

Moving to ETH, the price is currently engaging with the $3.4K level, demonstrating a consolidation phase as it attempts to establish a clear direction. This recent price behavior has formed a support zone around the $3.2K level, offering a foundation that, if eroded, could potentially lead to a test of the $3K threshold, translating to a decline of roughly 12% from the current price point. Conversely, should the bulls regain control, we observe an immediate resistance level near the $3.6K mark, which would signify an approximate 5.8% ascent from the present valuation. The RSI indicator is at 51.71, suggesting a neutral market momentum with no immediate signs of overextension in either direction. Traders will likely continue to monitor these levels closely, as a breach on either side could signal a new directional bias for ETH in the near term.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Fed’s Powell Ready to Support Job Market, Even If It Means Lingering Inflation

• Chinese Premier Downplays Economy Risks, Highlights Policy Space

• Japan bucks private equity slowdown in Asia Pacific with deal value soaring 183% last year.

• Biden signs $1.2 trillion spending package for government funding until October

• US and Japan plan biggest upgrade to security pact in more than 60 years

• Trump’s looming $464mn guarantee deadline

• China blocks use of Intel and AMD chips in government computers

• Thiel, Bezos and Zuckerberg join parade of insiders selling tech stocks

• Burned Before, Bond Markets Resume Rate-Cutting Trades Worldwide

• Apple’s Cook Tells China Forum AI Is Key for Climate Battle

• Russia Mourns Victims as Moscow Attack Deaths Rise to 137

Crypto

• BlackRock Seeing Only 'A Little Bit' Demand for Ethereum from Clients, Says Head of Digital Assets

• SEC's Gensler Says Crypto Firms Skip Public Disclosures by Dodging Registration

• RippleX addresses XRP ledger’s AMM pool error, advises user caution

• Polygon zkEVM down due to issues with blockchain sequencer

• Hospitality worker caught with $2.5B Bitcoin found guilty of money laundering

• EU committees approve ban on anonymous crypto transactions via hosted wallets

• Floki Inu roadmap reveals plans for regulated bank accounts

• Ethereum price clings to key support amid SEC probe and traders’ shifting sentiment

• Crypto markets need ‘disinfectant,’ says SEC chair

• FTX to offload $1B Anthropic stake to pay off bankruptcy debts within weeks — report

• Montenegrin authorities to release Do Kwon as he awaits extradition: Report

• US government asks for court approval to sell private jets tied to Sam Bankman-Fried

• SWIFT proposes a role for itself in a tokenized future on a unified ledger

Yours sincerely,
Treehouse Research 🌳