🌳 Fed chair suggests absence of significant progress in mitigating inflationary pressures; Former New York Fed chief joins Binance US board

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• Fed chair suggests absence of significant progress in mitigating inflationary pressures; China’s BYD launched a strategic initiative to position its car offerings to compete with Tesla and Jeep (More in Macro & TradFi)
• BTC and ETH rebounded from support levels and RSI indicates neutral sentiment for both (More in DeFi & CeFi)
• Former chief compliance and ethics officer of New York Fed joins Binance US board; Tokenholders approved the $7.5B merger of FET, AGIX, and OCEAN MVRV suggests concern as it aligns with four-year average levels (More in On-Chain)
• IV levels consolidate post-peak; BTC skew suggests bearish sentiment, yet stabilizes slightly (More in Crypto Technical Analysis)

Macro & TradFi

Federal Reserve Chair Jerome Powell said that while recent data displayed strong growth and rally in the labor market, there is also an absence of progress on their 2% inflation goal, further underscoring the diminishing likelihood of imminent interest rate reductions. Chair Powell highlighted that the Federal Reserve's preferred measure of inflation, the personal consumption expenditures price index (PCE), indicated core inflation at 2.8% for February and has exhibited minimal fluctuation over the past several months. The FOMC update in March projected three interest rate cuts for the remainder of 2024. However, subsequent pronouncements by several policymakers have emphasized the data-driven nature of monetary policy, refraining from a commitment to a predetermined number of reductions. As a result, financial markets have had to reset their expectations for rate cuts this year, pricing in six to seven cuts at the start of 2024, which gradually diminished to one or two reductions, which will not start until September.

Chinese electric vehicle manufacturer BYD is aggressively expanding its product portfolio to encompass a wider range of market segments in a bid to compete with Tesla and Jeep. BYD has established a strong presence in the mass market segment for new energy vehicles (NEVs) in China, with their cars consistently ranked among the country's best-selling NEVs, which encompass both battery-only and hybrid cars. This move underscores BYD’s strategic push into global markets amid policy uncertainty in the US and Europe, with plans to launch an electric pickup truck overseas sometime this year.

Lastly, U.S. equity markets concluded Tuesday's trading session with mixed results, characterized by volatile price movements. Notably, the yield on the 2-year Treasury note briefly surpassed the 5% mark. Amidst news of Federal Reserve Chair Jerome Powell announcing a delay in cutting rates, the S&P 500 and Nasdaq fell by 0.21% and 0.12%, respectively. Conversely, the Dow appreciated 0.17%. Moving on to the top gainers in the stock market, Super Micro Computer Inc (SMCI) appreciated by 10.60% following the news that five-star rated analyst Ananda Baruah of Loop Capital Markets maintained a buy rating on the stock. 

CeFi & DeFi

• Former New York Fed chief joins Binance US board
• Token holders approved the $7.5B merger of FET, AGIX, and OCEAN into ASI
• Railgun denies being used by North Korean
• OKX executives Tim Byun and Wei Lan leave the exchange
• OKX’s Polygon-powered L2 ”X Layer” launches public mainnet
• Animoca founder says Bitcoin will reach over $1M

Former chief compliance and ethics officer at the Federal Reserve Bank of New York, Martin Grant, has joined the board of directors at Binance.US, the United States-based cryptocurrency exchange. Grant, who served at the NY Fed from 2005 to 2022, brings his extensive regulatory, legal, and compliance experience to the exchange, aiming to assist in navigating the U.S. regulatory landscape. Norman Reed, Binance.US Interim CEO, emphasized Grant's addition as crucial in managing the current regulatory environment. Grant also holds the position of Global Head of Regulatory Affairs and Integrity at JST Digital, noting that the U.S. crypto industry is at a pivotal moment. This development follows Binance's recent formation of its first-ever board, chaired by Gabriel Abed, the ambassador of Barbados to the UAE. The changes come amidst ongoing legal proceedings involving Binance, Binance.US, and former CEO Changpeng Zhao, including a civil lawsuit filed by the SEC for allegedly offering unregistered securities.

In other news, token holders of SingularityNet, Fetch.ai, and Ocean protocols have approved a $7.5 billion merger to create the Artificial Superintelligence Alliance (ASI). The merger will see the Fetch.AI (FET) token transition into the ASI token with a total supply of 2.6 billion, while SingularityNet (AGIX) and Ocean (OCEAN) tokens will be converted at approximate ratios of 0.43:1. The ASI token is set to launch on May 24 with a combined value of $7.5 billion post-merger. Led by Fetch.ai CEO Humayun Sheikh, the ASI aims to establish a decentralized AI infrastructure promoting ethical and trustworthy practices. The project's roadmap includes deploying AI agents in commercial settings, developing neural symbolic language learning models, and facilitating AI data sharing and utilization. Additionally, ASI plans to invest in GPU infrastructure for computing and data efforts, building upon Fetch.ai's recent $100 million investment in Nvidia GPUs. The merger suggests a growing synergy between blockchain and AI technologies, with potential applications ranging from AI-powered services to self-publishing book platforms.

On-Chain

A CryptoQuant analysis showed that the current BTC market sentiment, as indicated by the MVRV (Market Value to Realized Value) ratio, suggests caution. Historically, a transition from recovery to a bull market begins when MVRV aligns with the median of the Bollinger Bands or the four-year cycle's average level. Currently, with an MVRV of 2.23, the market value is more than double the average on-chain purchase price. This hints at the potential for a -20% correction, bringing levels closer to an MVRV of 1.7. While the market anticipates a 50k 'normal' in the context of the rapid recovery phase, external factors such as ETFs, interest rates, geopolitical tensions, and structural market changes could influence the actual outcome.

Elsewhere, another analysis by CryptoQuant on historical BTC halvings showed that a pre-halving price drop of 16.65% echoes the historical pattern observed in previous cycles. Such retracements have typically preceded substantial price gains post-halving, suggesting that this current dip may be part of a consistent trend rather than a cause for concern. Past halvings saw declines of 40.36% and 20.35% before significant rallies, and while the extent of the drop varies, the pattern of a downturn before the event persists. For strategic investors, this could represent an opportunity to consider measured market entries as the cycle towards a new peak potentially unfolds.

Crypto Derivatives

• Funding rates remain positive for both BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH remains elevated at 70.56% and 77.51%, respectively.
• The 30-day 25-delta skew (C-P) for BTC decreased further to -3.14%, while  ETH fell to -8.40%.
• The futures market witnessed $207.35M in liquidations, with longs representing 63.94%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

The 7-day Implied Volatility (IV) has retreated from its monthly apex, presently consolidating at 69.03%. Mirroring this trend, the 30-day IV has closely aligned, registering a parallel value of 69.02%. The observed contraction in volatility levels may be attributable to market assimilation of geopolitical developments, specifically the discourse surrounding non-military responses, including the imposition of sanctions. Notably, U.S. Treasury Secretary Janet Yellen has intimated an imminent intensification of sanctions against Iran.

The term structure in the options market has exhibited a reversion to a mostly contango state, indicative of a normalization in the futures pricing curve. This shift could be attributed to a substantial exercise of short-dated options from yesterday.

The BTC 25-delta skew chart shows a significant decline, with the 7-day and 30-day IV in negative territory, at -8.04% and -3.14%, respectively. This indicates a bearish sentiment among traders for the short to mid-term, although there has been a noted recovery of around 1% for the 30-day IV from yesterday.

Yesterday, @Paradigm showcased a varied mix of derivative structures this week, with market participants actively engaging in speculative strategies. Key BTC trades included the execution of a 300x 31-May-24 50/80k Bull Risk Reversal and the sale of a 206x 28-Jun-24 70/75k Call Spread. On the ETH side, the focus was on the sale of 4000x 26-Apr-24 3100 Calls and the complex positioning through the purchase of a 3000x custom structure involving 19-Apr-24 2950 Puts and 26-Apr-24 3100 Calls.

Crypto Technical Analysis

Moving on to TA, the BTC 4-day chart indicates a bearish reversal as noted in the technical analysis from the previous day. BTC price rebounded from the lower boundary of the support area at $61.8K, and is currently situated at the $64.2K mark. If bearish sentiment were to take over, the price could be tested by the area of support at $63.7K to $61.8K, a 3.7% decline. Conversely, a resistance level at $70.9K stands as the barrier for bullish momentum. The RSI rebounded after briefly touching the oversold zone and is now at a neutral zone of 45, signaling an equilibrium in buying and selling sentiment.

In the ETH 4-hour chart, ETH price exhibited a similar movement to BTC, rebounding from its area of support at $3K, and currently hovering at $3.1K. Should ETH price break beyond this current area of support, the next support level is situated at $2.7K level, a 12.9% decline. If ETH price continues on its bullish trajectory, it presents a resistance at the $3.6K level, a 16.1% upside. The RSI is currently at 43.42, indicating that the selling pressure is gradually slowing down and brings forth the potential for price volatility as it is in the neutral zone.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Powell says there has been a 'lack of further progress' this year on inflation.

• China's Xi lays out 4 ways to resolve Ukraine 'crisis'; Russia intensifies efforts to seize key town.

• China's BYD fires up its car offerings to compete with Tesla and Jeep

• House panel launches probe into Biden's FTC-DOJ task force

• United slashes 2024 aircraft delivery plan as Boeing crisis leads to delays

• Biden fund gets big donation from son of Republican megadonor Larry Ellison

• 'Iran is in for the long haul' with oil tanker hijacks, expert says

• Republican governors from six states condemn UAW campaigns, citing layoffs

• Andreessen Horowitz raises $7.2 billion, a sign that startup market may be rebounding

• Planet Fitness shares fall as company announces new CEO

• Venezuela to cut ties with Ecuador over embassy raid

• Hardline Republicans balk at US Speaker’s Ukraine aid plan

• Morgan Stanley chief says ‘existential’ need for M&A will revive investment banking

Crypto

• ‘Bitcoin will reach over $1M’ — Animoca founder at WebSummit Rio

• Railgun denies being used by North Korea as it nears $1B total volume

• SEC has 'very low' odds of winning against Uniswap: Crypto lawyer

• Senate Banking Committee chair wants to combine stablecoin bill to boost chance of passage

• Israeli central bank official says CBDC competition with banks is good for economy

• Tokenholders approve $7.5B AI merger

• Reversing layoffs of 2022? Crypto exchanges are adding staff members

• UK trade association experiments with Regulated Liability Network

• Former NY Fed chief joins Binance.US board

• ICP’s Schnorr integration ushers in Bitcoin DeFi era

• Memecoins have more potential upside than blue-chip governance tokens, according to VC

• Solana DEX Drift set to airdrop 100 million tokens to users

• OKX 'OG' Execs Tim Byun and Wei Lan Leave Crypto Exchange

• TON-Based Economy Starting to Take Root in Telegram, TON Foundation Says

• Tether, Circle Diverge on How to Tackle Global Patchwork of Stablecoin Rules

• Crypto Exchange OKX's Polygon-Powered Layer 2, 'X Layer,' Hits Public Mainnet

• OG Bitcoin L2 Stacks Is Getting a Major Overhaul

Deal Flow

• DePIN project SendingNetwork raises $7.5 million from Balaji Srinivasan and others

• Ethereum liquid restaking protocol Puffer Finance reaches $200 million valuation in new token funding round

• Andreessen Horowitz raises $7.2B for new venture funds

• Avalanche home loan tokenization protocol raises $10M in Series A

• Decentralized exchange CVEX raises $7 million ahead of upcoming mainnet launch

Yours sincerely,
Treehouse Research 🌳