BTC

ETH

S&P Futures 500

$30,014.44

$1,886.31

$4,563.50

(+0.81%)

 (-0.11%)

(-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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Our Daily View

What We Are Covering Today

  • Distressed investing funds are paying attention to commercial REITs; Elon Musk to soon rebrand Twitter with the “X” logo (more in Macro & TradFi)
  • Conic Finance faced a significant security breach; Optimism advances in integrating zero-knowledge proofs (more in DeFi & CeFi)
  • XRP whales continue to accumulate amidst appeal; LTC halving sees number of wallets with 100+ LTC rising (more in On-Chain)
  • IV continues to fall in the crypto markets with positive skew for BTC and negative skew for ETH (more in Crypto Derivatives)
  • BTC holds below ascending channel; ETH weekly MACD crosses lower (more in Crypto Technical Analysis)

Macro & TradFi

Distressed investing funds are seizing the opportunity the year-long commercial real estate selloff presents, acquiring battered REIT shares. D.E. Shaw, Flat Footed, H/2 Capital Partners, and Lonestar Capital have purchased at least 20% of shares in Diversified Healthcare Trust, leading to conflicts as hedge funds vie for shares and clash with management teams. The distressed market is paying attention to REITs, particularly those with lower office exposure impacted by the broader selloff. The jostling over acquisitions has led to fierce disputes among investors, with some seeking mergers while others oppose them. The market value of all REITs has decreased by approximately $200B in the last two years, with some underperforming mortgage REITs facing capital market challenges. As the battle intensifies between investors and management, the fate of REITs remains uncertain in the turbulent commercial real estate landscape.

In other news, Elon Musk, the owner of Twitter, announced plans to rebrand the platform and change its logo to an "X" instead of the signature blue bird. Musk's vision for Twitter includes becoming an "everything app" with features like audio, video, messaging, and banking capabilities. He aims to create a digital town square and transform the platform into a video-centric space. However, Musk's rebranding approach has received mixed reactions, with some questioning the decision to replace a globally recognized brand with a generic symbol. Despite the challenges, Musk remains optimistic about Twitter's potential, even after facing a ~50% drop in advertising revenue. His moves come as rival platforms emerge, including Threads from Mark Zuckerberg's Meta Platforms, which may redefine Twitter's identity and spark renewed interest among users and advertisers.

During last Friday's trading session, the major US equity indices showed a generally muted performance, with SPY and DJIA remaining relatively flat, while NASDAQ experienced a slight drop of 0.26%. Notably, the DJIA achieved its tenth consecutive daily gain, driven by the strong performance of blue-chip companies such as Intel, Procter & Gamble, Nike, and Chevron, which countered the earnings-day selloff in American Express shares. This winning streak is the longest in almost six years, indicating the broadening rally in the stock market from high-tech firms to other sectors.

DeFi & CeFi

  • Conic Finance loses $3.2M to reentrancy attack on ETH Omnipool
  • Optimism to kick off Zero-Knowledge Proofs Project
  • Celsius reaches settlement that will enable users to receive assets by year-end
  • Binance France records €4 million loss in 2022
  • Alphapo’s hot wallets hacked for over $31 million
  • Trader Joe to launch on Ethereum
  • dappOS Closes Seed Funding Round Led by IDG Capital and Sequoia China

Last Friday, DeFi platform Conic Finance fell victim to a reentrancy attack resulting in a loss of 1,724 ETH, equivalent to $3.2M. The attack was enabled by misinterpreting an address in the Curve V2 pools, exclusively affecting Conic's ETH Omnipool. The perpetrator, the Lady Pepe Exploiter, had previously conducted smaller attacks. This incident contributes to the recent string of crypto platform exploits, leading to a cumulative loss of over $100 million in digital assets this month.

In other news, Optimism is proceeding with proposals from O(1) Labs and RISC Zero to integrate zero-knowledge proofs, aiming for secure, efficient cross-chain interactions. RISC Zero proposes upgrading Optimism's fault protocol to ensure correct state changes and accelerate finality time. In parallel, O(1) Labs suggests using Kimchi, a zk-proof system in the Mina Protocol, to validate transactions and update the Ethereum network state via smart contracts. The Optimism Foundation is now coordinating with both parties to progress the project.

On-Chain

The number of XRP whale wallets holding over 100 million tokens has reached 199, the highest since May 13. This surge comes as the SEC prepares to appeal Judge Torres' ruling against Ripple. Pro-XRP attorney John Deaton reassured holders that even with the appeal, a decision would likely take at least two years. The accumulated tokens are now worth at least $74M, according to data from Santiment.

Litecoin holders are eagerly counting down to the halving event, which is just nine days away, and analysts notice increased optimism among traders. Over the past six months, 1,185 new wallet addresses have acquired more than 100 LTC each, indicating a bullish sentiment ahead of the halving. Data from Santiment reveals that 36,800 wallets now hold at least 100 LTC each, pointing to accumulation and a potential price rally for the altcoin.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH
  • Deribit Implied Volatility Index (DVOL) fell to 39.28% and 37.37% for BTC and ETH respectively
  • 30-day 25-delta skew (C-P) for BTC and ETH is at 2.25% and -0.92% respectively
  • The futures market witnessed $132M worth of liquidations on over the Weekend with longs representing 57.4% of the total

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On

15.29%

SOL

dYdX

Bybit

10.22%

XRP

OKX

Bybit

9.02%

BNB

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


ATM IVs for BTC and ETH continue to decline as prices trade within tight ranges, showing little decisive breakout action in the market.

Term structure remains in contango, with IV falling across all tenors. Short-expiration IVs are slightly higher at the beginning of the week, possibly anticipating more volatile trading. BTC's IV continues to trade higher than ETH across the curve. Since the start of the regional banking crisis, we have observed this phenomenon, as it sparked a haven bid in BTC primarily due to call flows.

The 30-day skew (C-P) on BTC remains positive, reflecting market participants' optimism about BTC as a safe haven bid and their anticipation of potential spot Bitcoin ETH approval. On the other hand, ETH skew became increasingly negative, indicating it is seen as a higher-risk play due to the slow bleed in crypto markets over the past weeks, leading to a preference for Puts.

As reported by @paradigm, bullish flows were observed early last week in BTC options as traders bought fresh upside positions and rolled out their existing upside positions. The spot market experienced choppy price action within a range as the summer lull continues. Notably, there was continued interest in longer-dated tenors. Dec calls dominated the flows over the past six weeks, indicating the comeback of investors’ interest in the market for the longer term. A noteworthy trade involved the purchase of 840x 29-Dec-23 $34K/$45K Call Spread.

Crypto Technical Analysis

Turning our focus toward technical analysis, the price action of BTC showed limited movement during the weekends. Looking at the 4-hourly chart, we can observe that prices have remained below the ascending channel since the break below it occurred last week. This break could signify a shift in the market structure, indicating a bearish scenario. In such a case, BTC's next potential support level would be its June open at $27.2K. On the weekly chart, a noteworthy observation is the imminent formation of a lower crossover between the MACD and price, due to the rejection of the price from its macro range-highs.

ETH has experienced a significant price break, falling below the ascending channel, but it is currently maintaining its position above the June open. This shift in market structure signals a potentially bearish scenario for ETH, indicating a continuation of its downward momentum toward the next support level at $1.77K. Similarly, on the weekly chart, a similar pattern is emerging, with ETH facing rejection at its macro range-highs, and the MACD has already registered a lower crossover, adding weight to the bearish outlook.

Lastly, the ETHBTC pair continues to display weakness, sustaining its downward trend after a brief rejection at the 0.06445 resistance level, coinciding with the descending trendline. If this downward trajectory persists, ETHBTC could revisit its yearly lows of 0.06047 in the months ahead.

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Treehouse Research 🌳