BTC

ETH

S&P Futures 500

$27,720.25

$1,893.75

$4,224.00

(-1.71%)

 (-1.14%)

(-0.05%)

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

GM Treehouser 🌳

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April 2023 Market Recap

Our Daily View

What We Are Covering Today

  • Biden, McCarthy aim to convince lawmakers as default deadline approaches; the West looks to de-risk trade with China (more in Macro & TradFi)
  • Fantom’s “Gas Monetization Program” goes live; MakerDAO community proposes to raise the DAI saving rate to 3.33% (more in DeFi & CeFi)
  • Dip in Bitcoin's Active Addresses signaled a potential shift towards bearish market trends, despite continued accumulation by larger wallets (more in On-Chain)
  • Crypto Options IV declines as traders maintain long-term optimism (more in Crypto Derivatives)
  • ETH demonstrates superior strength over BTC as ETHBTC pair holds above key levels (more in Crypto Technical Analysis)

Macro & TradFi

The White House and Republican congressional leaders are actively lobbying to secure approval for a deal aimed at avoiding a US default, despite facing criticism from various groups. President Joe Biden personally reached out to lawmakers to garner support, and both he and Republican House Speaker Kevin McCarthy expressed confidence in gathering the necessary votes. The bill sets federal spending plans through 2025 and suspends the debt ceiling until January 2025. Additionally, it establishes spending caps for security and non-security domestic sectors, allocating $886 billion and $704 billion respectively, for fiscal year 2024. Although the proposed increase in defense spending by 3.3% would be below the current annual inflation rate, President Biden assures that additional military funding will be provided if necessary.

The concept of "de-risking" has gained popularity among Western leaders as a more prudent approach compared to the previous notion of "decoupling" from China's economy. Concerns revolve around two main aspects: the advanced technology with potential military applications that China obtains from the West and the dependencies that the West has on China. Specifically, the US and EU are restricting China's access to critical technologies such as semiconductors, while also aiming to reduce their reliance on China for rare earth minerals like lithium, which are crucial for battery production. Currently, the EU imports about 97% of its lithium from China, according to Ursula von der Leyen, the European Commission president.The West also aims to reduce its dependence on semiconductors imported from Taiwan, which currently stands at 90%, by increasing spending on domestic chip manufacturing ($52B through the US Chips Act).

Although US markets were closed yesterday for Memorial Day, futures tied to the Dow Jones Industrial Average added 72 points (or 0.2%), S&P 500 futures gained 0.3%, and NASDAQ futures climbed 0.5%. Asia markets are experiencing mixed performance as investors await the US Congress vote on the debt ceiling deal: the Nikkei 225 opened 0.36% higher, while the Topix slightly declined. South Korea's Kospi and Kosdaq started strongly with a gain of 0.92% and 0.65%, respectively. However, Hong Kong stocks are expected to reach new lows for the year, with Hang Seng index futures at 18,522, signaling a fifth consecutive session of losses.

DeFi & CeFi

  • Vulnerability found in Polygon zkEVM and have since been fixed
  • Bali tightens regulatory surveillance against foreign tourists on using crypto as payment
  • Fantom gas monetization program goes live
  • MakerDAO raises DAI savings rate to 3.33%
  • NFT marketplace Tabi raises $10M angel round led from Animoca Brands, Binance Labs, and others
  • BKEX suspends withdrawals due to its users’ funds involved in money laundering

Andre Cronje, the co-founder of Fantom, recently announced the official launch of the Fantom Gas Monetization Program. This program allows eligible dApps (defined as those with a minimum of 125,000 transactions and at least 3 months of activity on Fantom) to receive an additional income in FTM, equivalent to 15% of the Fantom gas fee. According to Fantom's data, over 11,000 FTM tokens have been generated as rewards since the program's launch, distributed among four projects: Stargate Finance, LayerZero, SpookySwap, and Beet. Notably, Stargate Finance accounts for more than 80% of the rewards pool.

In another development, the MakerDAO community is preparing to vote on changes to various protocol parameters, including a crucial proposal to increase the DAI Savings Rate (DSR) from 1% to 3.33%. Based on the community proposal and discussions, the new DSR will be determined by a function of yield collateral yield (representing the yield on 3-month treasury bills) and stability collateral yield (representing the average yield on all cash stablecoins). The current market figures indicate that this would result in a DSR of 3.33%. This change is expected to have significant implications in the DeFi market, as other protocols like Aave and Compound offer only around 2-2.5% to stablecoin suppliers. Consequently, a substantial amount of capital is likely to flow into the DAI DSR vault in pursuit of higher yields.

On-Chain

Examining on-chain data from @Glassnode, we witnessed a 7% decrease in Bitcoin's Active Addresses. To reduce daily noise and provide a more accurate representation of recent trends, we've applied a 14-day Exponential Moving Average (EMA) to this metric. This dip suggests a potential change in network activity and user engagement. High levels of Active Addresses may signal an influx of new demand, an increase in speculation. In contrast, a downturn in Active Addresses, as we have observed in May, which may suggest a reduced demand and diminishing interest from investors as the hype around BRC-20 tokens slows down in the market.

On the other hand, analysis from Santiment suggests that wallet addresses holding between 10 to 10,000 BTC seem to be exercising caution amidst the price volatility observed over the past month, with Bitcoin prices fluctuating between $26K and $30K. Despite this, these addresses have collectively accrued an additional 93K BTC since prices began declining from their peak in mid-April. This potentially demonstrates confidence and strategic accumulation during a period of price decline, suggesting a potential long-term bullish perspective among these holder.

Crypto Derivatives

  • BTC and ETH funding rates remain positive
  • 30-day BTC ATM IV for BTC and ETH declined to 41.96% and 40.64% respectively
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH declined slightly to 47.09% and 45.78% respectively
  • 30-day 25-delta skew for ETH and BTC is neutral

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On

10.88%

BNB

Bybit

OKX

10.06%

XRP

OKX

Binance

9.21%

SOL

Bybit

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 $60.01M in liquidation yesterday with a 58.8% coming from longs at $35.27M.

The options term structure for BTC and ETH has exhibited a significant decline across various tenors, with BTC experiencing a particularly pronounced drop. This decline can be attributed to the positive news surrounding a tentative deal and resolution of the debt ceiling debate, which alleviated concerns in both the stocks and crypto markets. The crypto markets remained relatively stable on Monday, possibly influenced by the Memorial Day holidays in the United States.

Near-term IV for BTC and ETH options has witnessed a substantial decrease, particularly evident in the 7-day, 25-delta options. This decline indicates that market participants have assimilated the news regarding the GOP and White House's tentative U.S. debt ceiling deal, leading to reduced volatility expectations in the near term.

The 7-day 25-delta skew spread for BTC and ETH options reflects a neutral market sentiment without a discernible positive or negative skew. This shift suggests that traders are adopting a cautious and mixed outlook. Call options have gained preference this week, potentially indicating anticipations of positive developments or market expectations.

BTC options have witnessed significant trading volumes over the past 24 hours, particularly for the 30 June 23 expiration date. The total options traded amount to $2.24M, evenly split between calls and puts. This balanced trading activity implies mixed sentiment in the near term as traders exercise caution amidst potential significant price movements. Notably, the open interest for the 30 June 23 expiration concentrates between the $30-35K strike prices, indicating an overall bullish sentiment. Additionally, medium-term expiration dates between Sep and Oct 23 have observed substantial trading volume for call options, suggesting a more bullish outlook over a longer time horizon. The top traded strategies observed in the 24hr period include bull and bear diagonal call spreads. This further emphasizes the mixed sentiment among traders in the near term.

ETH options, too, have demonstrated significant trading activity, particularly in the 30 June 23 expiration. Over the past 24 hours, call options worth $1.31M were traded, signaling traders' expectations of considerable upward movement for ETH in the immediate term. This heightened bullish sentiment underscores market participants' optimism and positioning for potential price increases. The majority of the open interest for the 30 June 23 expiration lies between the $1.8K and $2K strike prices, further accentuating the prevailing bullish bias in the market. It is noteworthy that the top traded strategy in ETH options over the past 24 hours has been the long ratio call spread, with over 1K ETH in premiums paid.

Lastly, the VIX fell to 17.46.

Crypto Technical Analysis

Shifting focus to technical analysis, BTC tagged both the upper boundary of the ascending trendline and the quarterly open on the daily-chart. However, it failed to break through these levels and subsequently retraced from yesterday's position. Analyzing the Stochastic RSI, it presently resides in the overbought zone and is awaiting a downward crossover. Additionally, the $27.5K level is expected to serve as a critical support area. Sustaining a position above $27.5K could potentially lead to further upward movement for BTC. Conversely, if BTC fails to hold above this level, it may decline, with the next significant levels of support to monitor being $26K, followed by the mid-range of $23.3K.

On the other hand, ETH demonstrates greater resilience in maintaining its position above the descending trendline compared to BTC. Moreover, ETH is trading above its quarterly open and the $1.8K support level. The Stochastic RSI for ETH is in the overbought region and awaits a crossover. For ETH to sustain its upward momentum, it must remain above these significant levels. Any breach below these levels would signify a bearish indication for the token, potentially leading to further downward movement. In such a scenario, the next notable levels to monitor would be around the mid-range of $1.48K.

In a different aspect, ETH/BTC has successfully maintained its position above the critical resistance level of 0.6789, while remaining resilient above the descending trendline breached last Friday. Looking ahead, ETH's strength relative to BTC could be sustained if this trading pair maintains its position above these crucial levels.

Access institutional-grade commentary on TradFi Ă— Crypto markets

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