BTC

ETH

S&P Futures 500

$28,366.50

$1,788.25

$4,055.25

(+3.93%)

 (+0.63%)

(+0.98%)

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

GM Treehouser 🌳

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February 2023 Market Recap

Our Daily View

What We Are Covering Today

  • Taiwanese President pays unofficial visits to the US that could potentially enrage China; Multiple companies have reportedly dropped their metaverse projects (more in Macro & TradFi)
  • Shapella hard fork set to go live around April 12; Otherside launches new game for Otherdeed holders (more in DeFi & CeFi)
  • 10K+ ADA holders continue to accumulate since October dip (more in On-Chain)
  • BTC turns to backwardation; Variance risk premium flips positive as RV falls (more in Crypto Derivatives)
  • Both BTC and ETH experienced whiplash in early Asian session (more in Crypto Technical Analysis)

Macro & TradFi

Taiwan's President Tsai Ing-wen has arrived in New York for her first visit to the US in over three years. However, Beijing has issued warnings that American politicians who engage with her could trigger retaliation. This visit provides the Taiwanese president with an opportunity to promote her country as a democratic island to the US, its most prominent supporter. As the visit is non-official, this is also in line with US policy towards China and is technically considered a transit. Nevertheless, her visit could spark an angry response from Beijing, which considers Taiwan an integral part of its territory.

Meanwhile, Disney, Microsoft, and Facebook are all scaling back their plans for the metaverse. Even Facebook, which recently changed its name to Meta Platforms, emphasized more focus on AI on a recent earnings call. The slow adoption of the metaverse, high hardware costs, and glitches have driven down expectations for the revenue potential of the metaverse. Virtual real estate prices have also dropped, with Decentraland's median land sale price declining by nearly 90% in one year.

UBS is also bringing back former CEO Sergio Ermotti, current chairman of Swiss Re, to oversee the "most important and complicated transaction" with Credit Suisse Group, according to UBS Chairman Colm Kelleher. Ermotti led UBS from 2011 to 2020, overseeing a shift in focus to wealth management and shrinking the investment bank.

Major equity indices closed slightly lower yesterday, with the SPX, DJIA, and NASDAQ down 0.16%, 0.12%, and 0.45%, respectively. Treasury yields increased further, with the 2-year and 10-year Treasury yields currently sitting at 0.19% and 1.68%, respectively.

DeFi & CeFi

  • Ethereum developers confirm Shapella is set to activate on 12 April for epoch 194048
  • Otherside launches new collection-based strategy game, Legends of the Mara
  • Sui launches permanent testnet, which continues to run after mainnet launch
  • AI-focused protocol Fetch.ai raises $40M from DWF Labs
  • Restaking protocol EigenLayer raises $50M in series A funding round led by Blockchain Capital
  • Lido to sunset staking service on Polkadot and Kusama by 1 Aug
  • Sei establish Sei Foundation to manage token grants, airdrops, request for products, initiatives and delegation programs
  • Lido to issue NFTs for withdrawal requests
  • XRP surges amid hopes that Ripple Labs will win its legal battle against the SEC

The Ethereum Foundation has announced that the Shanghai and Capella upgrades, collectively known as Shapella, will activate at epoch 194048 scheduled on April 12, 2023, at 22:27:37 UTC. This will allow Ethereum validators to withdraw their staked Ether from the Beacon Chain, enabled by Ethereum Improvement Proposal EIP-4895. Full withdrawals can be made via an exit queue, which is dependent on the size of the validator set in the network. To prevent a flood of Ether from disrupting the market, only around 0.40% of the total staked ETH will be allowed to be withdrawn per day. Currently, there is over 6.3 million Ethereum staked on the network.

Elsewhere, Yuga Lab's metaverse, Otherside, has announced the launch of Legends of the Mara, a new collection-based strategy game. The 2D game is powered by ApeCoin and utilizes the Otherside Koda collection, as well as a new collection called Mara, which can evolve into Kodamara. Each Otherdeed holder will receive a Vessel NFT and can participate in the game with at least one Otherdeed, in addition to a Koda and/or an apprentice Mara. Legends of the Mara is set to launch in May.

On-Chain

A $SAND whale emptied out its entire holding of 409M $SAND worth $250M to a new non-exchange address. This was the largest single transaction since the first week of $SAND being launched (@Santiment).

Addresses holding 10K or more $ADA, have continued to accumulate $ADA since the major price dip in October. They have collectively accumulated an additional 1.03B $ADA, representing a 3.3% increase in holdings over the past five months (@Santiment).

Crypto Derivatives

  • BTC funding rate increases while ETH funding rate falls
  • 30-day ATM IVs increased to 61.34% and 62.29% for BTC and ETH respectively
  • 30-day 25 delta call skew for BTC increased to 3.70% while ETH skew flips to call premium at 1.98%

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On

15.80%

ETH

OKX

DYDX

13.79%

SOL

OKX

DYDX

11.11%

XRP

OKX

BYBIT

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 experienced total liquidations of $104.63M in the past 24 hours, with shorts accounting for the majority at $79.56M.

=

In the options market, BTC IV rose across the curve, with the near-term increasing significantly, leading to backwardation in the term structure. Meanwhile, ETH term structure remains flat. The variance risk premium turned positive for both BTC and ETH at 3.70% and 1.98% respectively as the 7-day RV dips. BTC 30-day call skew tightens to 3.70% while ETH skew flips to call premium at 1.98%. Looking at the volume, the skew toward calls is caused by an increase in call volume while the put volume remains stagnant.

On the flow side, the majority of BTC volume has been generated from the 31 Mar contracts. Open interest for the 31 Mar contracts consists of 81K call contracts and 59.88K put contracts with a net notional value of $4.05B. A closer look at the open interest for 31 March contracts reveals that the bulk of the calls is concentrated at the 30,000 strike price. Interestingly, there are also substantial amounts of calls that are ITM. Interestingly, there are 29.2K call contracts ranging from 21,000 to 27,000 strike prices.

Some noteworthy trades were the 1K contracts of BTC 26 May 35K/38K call spread and the 10K contracts of ETH 30 Jun 2.5K/3.5K call ratio (@tradeparadigm).

Finally, the VIX falls for the fourth day in a row and sits at 19.12.

Crypto Technical Analysis

On the TA front, BTC has experienced a short-term bull run driven by the bullish sentiments in the market regarding the possible verdict on the SEC lawsuit against Ripple and XRP. Specifically, BTC price broke the upper trendline and the $28.77K resistance zone. However, the market has confirmed it to be a fake-out with price immediately dropping back to the original level. Despite the drop, RSI remains elevated and is currently sitting at 64.7 for the 4H timeframe.

Meanwhile for ETH, a new resistance zone could be confirmed apart from the broadening pattern at $1.82K. Despite the bull rally, ETH has stayed below this zone and is currently pulling back to the 38.2% of the Fibonacci retracement level. If the reversal is confirmed and the downward trend continues, we may see price slowly approach the lower support zone at $1.73K, indicating a potential 3.1% downside.

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