One More Testnet To Go Before Shanghai Hits Mainnet; Yuga Labs Joins Ordinals Hype

BTC	ETH	S&P Futures 500
$23,089.00	$1,599.90	$3,960.00
(-1.80%)	(-2.13%)	(-0.88%)
Note: All percentages shown above are referenced to the previous business work day's 09:00 (GMT+8)

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January 2023 Market Recap

Our Daily View

What We Are Covering Today

US 10-year Treasury yield briefly hits its 3-month high at 3.983%; Goldman Sachs moves away consumer businesses (more in Macro & TradFi)
Shanghai and Capella upgrades done on Sepolia testnet with one final testnet being Goerli testnet; Yuga Labs drops new Ordinals NFT collection (more in DeFi & CeFi)
Significant negative correlation observed between ETH price movements and the percentage of supply held by exchanges (more in On-Chain)
Put options dominate near-term maturities flow (more in Crypto Derivatives)
BTC sees golden cross on 100-d and 200-d SMA (more in Crypto Technical Analysis)

Macro & TradFi

Asian stocks opened lower, following a turbulent month for global markets that saw a 3% drop. Goldman Sachs is reportedly exploring options to reduce the size of its consumer business, according to its CEO David Solomon. The bank is said to be considering "strategic alternatives" for its credit card partnerships and specialty lending. Property developer China Evergrande Group is struggling to make a deal with foreign bondholders, raising the possibility of a court-mandated winding down. South Korea's exports fell in February due to slow global demand and lower chip prices, further weakening the economy already hit by high interest rates and inflation. Australia's GDP expanded at a slower-than-expected pace in Q4 2022, indicating that the Reserve Bank's interest rate increases are starting to affect economic activity. Japanese and Australian shares dropped, while Hong Kong's Hang Seng contracts suggested modest gains. China manufacturing PMI is expected to be released today.

Major US indices marginally lost yesterday's gain with NASDAQ down 0.10%, SPX by 0.30% and DOW by 0.71%. US 10-year Treasury yield briefly hit 3.983%, marking its highest level in three months as it nears the 4% level.

DeFi & CeFi

Shanghai & Capella upgrade goes live on Ethereum Sepolia testnet
Yuga Labs introduces Bitcoin Ordinals NFT project called TwelveFold
Decentralized telecommunication service provider REALLY raises $18M in seed round led by Polychain
Fixed-rate lending protocol Term Finance raises $2.5M in seed round led by Electric Capital
Non-custodial liquid staking protocol ether.fi closes $5.3M fundraise co-led by North Island Ventures, Chapter One and Node Capital
Capser Labs form partnership with Google Cloud
Visa and Mastercard to pause crypto partnership, according to Reuters
Ava Labs announces strategic partnership with Tencent Cloud
Metaverse project Gamium to partner with Meta, $GMM up over 4x
Bitcoin developer working on new Bitcoin vault features to protect against hackers
Gaming engine Unity introduces decentralized tools, adding support for 13 different blockchain-based SDK, including Metamask, Aptos and Immutable X

The Shanghai and Capella upgrade has finally reached Ethereum Sepolia testnet where the execution layer and consensus layer undergo upgrade necessary for $ETH withdrawals. This marks the second testnet that has completed the Shanghai upgrade with the last being the Goerli testnet before going live on the mainnet.

Elsewhere, mutliple deal flows were announced as Web3 funding continues to flow in. REALLY, a decentralized telecommunication service provider, has raised $18m in seed funding for its blockchain-powered telecommunications community. Fixed-rate lending protocol, Term Finance, has raised $2.5m in seed funding for its on-chain double-auction mechanism on its fixed-rates products. And finally, ether.fi, an Ethereum-based liquid staking protocol, has raised $5.3m in a funding round co-led by North Island Ventures, Chapter One, and Node Capital.

Lastly in the land of NFT, Yuga Labs is introducing a new limited edition collection called TwelveFold on the Bitcoin blockchain. The collection comprises 300 generative pieces “inscribed on satoshis” on the Bitcoin network, created using 3D modeling, algorithmic construction, and high-end rendering tools. The NFTs will not have any utility or relation to any previous or future Ethereum-based Yuga projects. The auction for the TwelveFold collection will take place later this week, and interested buyers will be notified 24 hours in advance. The bidding token for the artwork is Bitcoin, and an empty BTC address will be required.

On-Chain

Looking on-chain, the recent analysis showed that while significant inflow of Sandbox’s tokens were observed on exchanges following the vesting schedule as the price of SAND remained stagnant. Some may argue that this is an indication of the HODL mentality of its tokenholders and the bullish sentiment for further value accrual in the near future (@Santiment).

Furthermore, a recent study has shown a significant negative correlation between ETH prices and the percentage of the token supply that is held by known top exchanges. This figure has also seen continuous decreases since the beginning of the year and is about to reach an all-time low if the momentum continues (@Santiment).

Crypto Derivatives

BTC and ETH funding rates remained relatively flat
30-day ATM IV increased to 47.76% for BTC and decreased to 51.94% for ETH
30-day 25 delta call skew increased slightly to 0.38% for BTC while put skew tightened to 2.56% for ETH

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

Net Annualized APR	Perp (USDT pair)	Long on	Short On
10.98%	DOGE	DYDX	OKX
8.96%	BTC	OKX	BYBIT
6.02%	LTC	DYDX	OKX
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

For futures, total liquidations over the past 24 hours amounted to $66.55M, the majority coming from longs.

On the options front, term structures remain in contango for BTC and ETH. While IV increased for BTC across maturities, near-term lV on ETH has slightly decreased. 7-day RV fell to 41.93 and 44.02 respectively for BTC and ETH. ETH’s variance risk premium slightly increased to 4.2%, with BTC’s carry flipping positive to around 3.7%.

On the flow side, by BTC volume, there were significantly more put options that were placed with the expiration of 10th March. This might indicate the market’s expectation for the possible downward pressure on price in the next week or so. Taking a closer look at the strike prices for the BTC options expiring today, there are 282.9 contracts that are ITM. The majority are coming from put options with the strike price of 23.5K. Apart from these, there are also a large number of put options at the 22.5K strike which acts as the hedging instrument for investors during this bull rally. The top strategy is the long ratio call spread with a $38.88M notional amount.

Lastly, the VIX closed lower to 20.7 yesterday.

Crypto Technical Analysis

Onto TA, BTC fell by 1.52% overnight as price swung lower during US trading hours. On the daily timeframe, 100d and 200d SMA formed a golden cross though momentum indicators remain bearish. The next support zone to look out for is the $22.65K - $22.95K range.

As for ETH, the price also largely dipped during US trading hours, falling by 1.77% overnight. ETH has managed to find support once again at the bottom boundary of the rising channel as bears were unable to break it. If the channel is broken, the next support zone to look out for would be the $1,545 - $1,565 range.

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