🌳 Japan Faces Recession And Loses Economic Rank To Germany; Starknet Nears STRK Token Launch With High Anticipation

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• Japan hits recession, slips in GDP rank; VW halts imports over ethics (More in Macro & TradFi)
• $STRK airdrop and launch soon; Revolut giving out $BONK in campaign (More in DeFi & CeFi)
• Polygon transfers MATIC; Bitcoin whales position for market movement, data indicates (More in On-Chain)
• Skew suggests short and mid term alignment; Over 80% shorts liquidated (More in Crypto Derivatives)
• BTC shows bullish trends; ETH breaks resistance, both near overbought RSI (More in Crypto Technical Analysis)

Macro & TradFi

Japan entered a recession at the end of 2023, with its economy contracting for a second consecutive quarter, marking a significant downturn and losing its status as the world’s third-largest economy to Germany. Japan's Gross Domestic Product (GDP) decreased by an annualized rate of 0.4% in the final quarter, defying economists' expectations of a 1.1% expansion, following a 3.3% shrinkage in the prior quarter. This downturn has implications for the Bank of Japan's (BOJ) strategy to conclude its negative interest rate policy, a move that has been under consideration for the first time since 2007. The unexpected contraction, driven by reduced spending from households and businesses, complicates the BOJ's potential rate hike. Despite the BOJ's discussions on exiting the negative rate policy, Governor Kazuo Ueda has indicated that Japan's financial conditions will remain accommodative for some time. The data emphasizes Japan's dependence on external demand and highlights the challenges of domestic economic stimulation amidst rising inflation and sluggish wage growth, further supporting the case for maintaining a loose monetary policy.

In other news, Thousands of Porsche, Bentley, and Audi vehicles have been detained at U.S. ports after Volkswagen, their parent company, discovered a Chinese subcomponent in these cars that violated U.S. anti-forced labor laws. This issue arose from a part sourced from Western China by an indirect supplier, unknown to VW until recently. The discovery prompted Volkswagen to delay vehicle deliveries, aiming for replacements by the end of March, and to notify U.S. authorities immediately upon learning of the part's origins. This situation underscores the complexities of global supply chains and the challenges companies face in ensuring compliance with human rights standards. It also reflects the ongoing tensions between the U.S. and China, especially concerning products from regions like Xinjiang, where forced labor concerns are significant. Volkswagen's quick response highlights its commitment to human rights and ethical supply chain practices, amidst growing scrutiny over its operations in Xinjiang and broader U.S.-China relations.

Yesterday, major U.S. stock indices experienced significant gains, with the S&P 500 increasing by 0.96%, the Dow Jones by 0.40%, and the Nasdaq by 1.30%. In corporate developments, Meta, the parent company of Facebook, expanded its board by appointing two new directors, including the CEO of U.S. chipmaker Broadcom. Meanwhile, Warren Buffett's Berkshire Hathaway reduced its stake in Apple. Investors are now keenly awaiting retail sales data, scheduled for release tonight at 21:30 SGT, and the Federal Open Market Committee (FOMC) minutes set to be published next Thursday at 03:00 SGT.

CeFi & DeFi

• Starknet debut impending, Market Cap of over $1B estimated
• Bonk to be listed on Revolut as rewards
• Fraxtal launches as Frax’s L2
• Genesis cleared to liquidate over $1.3B worth of Grayscale’s GBTC shares

Starknet, the ETH L2 is on the brink of launching its native token, STRK, with an ambitious airdrop of 728 million tokens scheduled for February 20. This distribution aims to reach approximately 1.3 million wallets, marking a significant step in Starknet's journey to foster a more efficient blockchain infrastructure. Ahead of this launch, the decentralized exchange Aevo has been a hotspot for price speculation on STRK's future value. Pre-launch futures trading on Aevo suggests an initial price of $1.65 per token, setting Starknet's market cap at an impressive $1.2 billion based on the volume of circulating coins. This valuation highlights the crypto community's high anticipation and confidence in Starknet's potential to revolutionize the Layer 2 landscape. With a projected fully diluted market cap (FDV) exceeding $16 billion, the excitement underscores the significant interest in scalable solutions that Starknet promises to deliver. Aevo's introduction of STRK/USD pre-launch perpetual futures has provided a platform for investors to engage in early price discovery, echoing the innovative approaches in crypto trading and investment. As Starknet prepares for its token launch, the strategic airdrop and the enthusiastic market response signify a pivotal moment for the platform, aiming to solidify its standing in the competitive terrain of Layer 2 solutions.

Revolut is gearing up to introduce Solana's renowned meme coin, Bonk, to its trading platform, accompanied by a unique educational campaign designed to distribute $1.2 million worth of the cryptocurrency. This initiative aims to broaden the coin's adoption by enticing up to 500,000 new users to engage with the meme coin through a "learn" campaign. As Bonk continues to captivate the crypto community, marking a staggering 19,000% price increase since November 1, 2023, according to CoinMarketCap, this move by Revolut represents a significant step towards integrating meme coins into mainstream financial services. The campaign, pending approval from BONK's governing council, highlights the growing trend of leveraging educational incentives to foster digital currency literacy and adoption among the wider public.

On-Chain

Recent on-chain activity tracked by Spotonchain reveals a strategic move by wallets associated with the Polygon Foundation, characterized by two substantial transactions amounting to 15.5 million $MATIC being transferred to Binance. These transfers are estimated at $13.2 million, executed at an average unit price of $0.85. After each transfer, a minor downtrend in $MATIC's market price was observed, suggesting a possible market response to these inflows. Although the intent behind these transactions remains speculative, they align with typical asset diversification strategies employed by entities to mitigate risk within the volatile crypto ecosystem. Such actions could potentially reflect the Foundation's broader financial management tactics, possibly aimed at liquidity provision or reallocation of assets in pursuit of stability amid fluctuating market conditions.

Elsewhere, CryptoQuant's analysis suggests an imminent re-engagement of significant investors, colloquially known as 'whales', in the Bitcoin market. This inference is drawn from the observed uptick in Bitcoin transfers to derivative exchanges, a trend typically indicative of heightened trading activity by these large stakeholders. The timing of these movements is particularly noteworthy, coinciding with a phase of price consolidation in the Bitcoin market—a period characterized by little volatility and stable prices. Such market conditions often precede a strategic positioning by whales, who may anticipate a breakout or significant price movement. The accumulation of Bitcoin on derivative exchanges implies that whales could be gearing up to capitalize on potential price fluctuations through various sophisticated trading strategies, including futures contracts and options.

Crypto Derivatives

• Funding rates remain positive for both BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH decreased to 55.24% and 59.41%, respectively.
• The 30-day 25-delta skew (C-P) for BTC and ETH remains positive, with slight increases to 5.47% and 5.53%, respectively.
• The futures market witnessed $213.95M liquidations, with shorts representing 82.1%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Today's analysis of BTC's 7 and 30-day ATM IVs reflects heightened IVs. With Bitcoin's market capitalization soaring past $1 trillion on February 14. The 7-day maturity may be especially reactive to this influx of demand, given the proximity to these events. As such, the IV for this short-term period is elevated, reflecting the immediacy of market movements and the fresh capital entering the space. The 30-day maturity, while also potentially higher, might show a more moderate response as it encompasses a broader expectation window, where initial reactions are tempered by longer-term considerations.

The Shadow Term-Structure chart for BTC shows a pronounced contango setup, with the Market Implied Volatility (Mark IV) stretching above the model-based Implied Volatility (Shadow IV) across all maturities. The steepness at the short end, which sharply rises before smoothing out, may be due to option investors purchasing structures to protect against downside risk, given the recent surge in BTC price. Longer-term maturities are less steep, suggesting that while there is immediate excitement, investors may have a more moderate view of volatility in the distant future, possibly anticipating that the current rise will stabilize as the market digests the new developments.

The 25-delta skew shows the same pattern we have been seeing, both the 7-day and 30-day skews present a relatively parallel movement, indicating that sentiment for near-term price action is closely mirrored in the medium-term expectations. The recent bullish surge in BTC's price is likely also contributing to these fluctuations in skew and the data points to an attentively balanced market, with an inclination towards bullishness in the short to medium term.

Lastly, @Paradigm highlighted that during Asia / Europe Session Hours, key BTC trades are the following: 350 29-Mar-24 60000/26-Apr-24 75000 calls, 300 23-Feb-24 58000 calls, and 230 23-Feb-24 50000/53000 call spread. Noteworthy ETH strategies included 6125 29-Mar-24 3000/3500 call spread, 5000 29-Mar-24 2700/3200 call spread as well as 2500 23-Feb-24 put.

Crypto Technical Analysis

On the Bitcoin 4-hour chart, the price action has recently escalated, subtly breaching the previously identified ascending trendline. This indicates a bullish persistence as the market capitalization for BTC expands. At the moment, the price floats around $51.8K, tentatively surpassing the trendline, which may suggest a growing confidence among investors. Should BTC breach its current resistance at $51.8K convincingly, the next resistance level is anticipated at around $60K, marking an approximate 15.8% increase from the current price point. In contrast, should a reversion occur, support might be found near $47.5K, representing a potential decrease of roughly 8.3%. The Relative Strength Index (RSI) stands at 74.79, approaching the overbought threshold, which underscores the current upward momentum but also signals caution as the market may consider the asset overvalued at these levels, potentially leading to a pullback.

Moving on to ETH, we observe a decisive move as the price has successfully broken above its established resistance level at $2.7K. Currently, Ethereum is trading around $2.78K, and this breakout could signal a heightened interest from buyers, propelling the market value upward. Should Ethereum maintain its position above this threshold, we might anticipate the next resistance to emerge near the $3.1K level, translating to an approximate 11.5% increase from the current pricing. Conversely, should the breakout waver, the asset may seek support at the $2.53K level, potentially indicating a 9% retracement. The RSI reads at 76.45, slightly crossing into overbought territory, which often suggests that the market may soon regard the asset as overpriced, leading to a possible consolidation or downturn as the market seeks balance.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Japan Loses Its Spot as World's Third-Largest Economy as It Slips Into Recession

• BRICS nations to see highest surge in millionaires over the next decade — exceed the rise in G7 countries.

• TikTok, Facebook and YouTube sued by New York for alleged harm to kids' mental health

• SpaceX files to move incorporation site from Delaware to Texas

• Singapore's economy grew 2.2% in the fourth quarter, slower than forecast

• Interest on national debt could threaten U.S. economic stability: CBO director

• Cisco says it's cutting 5% of global workforce, amounting to over 4,000 jobs

• Democrats see New York special election win as blueprint for defeating Trump in November

• US Porsche, Bentley and Audi imports held up over banned Chinese part

• Warren Buffett’s Berkshire Hathaway pares its stake in Apple

• Russia seeks new nuclear capabilities in space, US intelligence shows

• Ex-General Prabowo Declares Victory in Race to Lead Indonesia

• MSCI to Remove Swath of China Stocks From Indexes as Markets Sink

Crypto

• Frax Finance Launches Ethereum Layer 2 Fraxtal

• Satoshi-Era Bitcoin Function 'OP_CAT' Dusted Off as Development Fervor Grows

• Starknet's STRK Could Debut With Market Cap of Over $1B, Aevo's Pre-Launch Futures Suggest

• Fake Curve Finance app listed on Apple Store

• Revolut to List Bonk, Distribute $1.2M of Meme Coin in 'Learn' Campaign

• Tiger Global Exited Coinbase Stake Late Last Year, Filing Shows

• U.S. Treasury Debunks Narrative That Hamas Relied on Crypto to Fund Terrorism

• Upcoming High-Level EU Financial Policy Talks Could Steer Crypto Oversight: Source

• Citibank Tests Tokenization of Private Equity Funds on Avalanche

• Protocol Village: Sommelier Expands to Ethereum Layer-2s Via Axelar, Starting With Arbitrum

• Fed Chair Powell Told House Democrats U.S. Needs Stablecoin Bill: Politico

• Crypto Custodian Taurus Enlists Lido to Bring Liquid Ethereum Staking to Swiss Banks

• Sandbox’s SAND Slides, ApeCoin Steady Ahead of $125M in Unlocks

• Court clears Genesis to liquidate $1.3B worth of Grayscale GBTC shares

• Novel ERC-X token crashes 87% after uncovering double spending glitch

• Researchers pair medical devices with blockchain to defend against cyberattacks

• Uniswap founder warns community about ENS wallet impersonation scam

• Digitex Futures Exchange CEO indicted for violating Bank Secrecy Act

• DeFi lender Moonwell enables USDC lending throughout Ethereum

• Paradigm's white hat hacker Samczsun spearheads crypto security operation called Security Alliance

Yours sincerely,
Treehouse Research 🌳