BTC

ETH

S&P Futures 500

$23,601.25

$1,658.75

$3,956.25

(+2.34%)

 (+3.76%)

(-0.06%)

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

GM Treehouser 🌳

Welcome to our Treehouse Daily newsletter (previously known as The Canopy Collective), where Treehouse brings you financial news and insights free daily! We believe you’ll find this helpful.

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February 2023 Market Recap

Our Daily View

What We Are Covering Today

  • Equities closed lower after ISM Manufacturing index February data; Elon Musk unveils his Tesla master plan (more in Macro & TradFi)
  • $650M in token unlocks set for March with over $220M released yesterday; ZRX jumped on the beta launch of Tx Relay API from 0x Labs (more in DeFi & CeFi)
  • Selling pressure on ETH is expected to be low after the Shanghai Upgrade (more in On-Chain)
  • ETH IV increased significantly in the last 24 hours for near dated maturities (more in Crypto Derivatives)
  • BTC and ETH break past their 20d EMA (more in Crypto Technical Analysis)

Macro & TradFi

Equities closed lower after data revealed that US manufacturing activity had slowed for the fourth consecutive month. During an investor day presentation, Elon Musk outlined Tesla's third "Master Plan," which will focus on building a global sustainable energy future without significant economic sacrifice. Bridgewater is capping the size of its flagship funds and investing in artificial intelligence and machine learning while expanding in Asia, equities, and sustainability. In China, bankers are being told to rectify their mindsets and lifestyles and to stop imitating Western ways as part of President Xi Jinping's campaign to tighten the Communist Party's grip on the financial system. This weekend, as the National People's Congress begins, Xi is expected to further entrench control by reviving a powerful committee to oversee economic and financial policy and appointing trusted allies to manage it.

Most US indices closed lower as NASDAQ fell 0.66%, SPX by 0.47% and DOW remained relatively flat. The 10-year yield was more recently at 3.996%, while the two-year yield was recently at 4.887%.

DeFi & CeFi

  • Polychain Capital in talks to raise $400M for its fourth fund
  • 0x Labs partners with Robinhood Wallet and Polygon to build a relay network
  • Chiliz announces the launch of $50M incubator Chiliz Labs
  • Binance AI product Bicasso is now live in beta mode
  • Magic Eden and Polkastarter Gaming to create a more inclusive and vibrant gaming ecosystem
  • Lido community votes on Ethereum V2 upgrade proposal
  • The Sandbox acquires German gam development studio Sviper
  • Conflux raises $10M from DWF Labs
  • Ellipsis Labs announces the beta launch of Phoenix, its DEX on Solana mainnet
  • Ethereum Foundation announces new grant round for Account Abstraction development
  • Multiple tokens are set to be unlocked in the month of March

For the month of March, 18 projects are scheduled to unlock their tokens, which will release approximately $650 million worth of tokens into circulation, according to Token Unlocks data. Six projects had already unlocked their tokens, releasing over $224.7 million worth of assets into the market. Hedera (HBAR) had the largest unlock of the day, releasing over 3 million HBAR tokens worth over $218 million. The other projects that were unlocked on March 1 were Euler (EUL), STEPN (GMT), Acala (ACA), 1inch (1INCH), and Galxe (GAL). The remaining 12 projects will unlock their tokens between March 3 and March 27, with ApeCoin (APE) being the second-largest unlock, releasing $205 million worth of tokens on March 17.

Elsewhere, Decentralized exchange 0x Labs saw a 20% increase in the value of its native token ZRX after announcing a partnership with Robinhood Wallet and Polygon to create a relay network. The beta version of the Tx Relay API will enable users to trade seamlessly across multiple blockchains, with liquidity coming from 0x's market makers and 70 exchanges. The API will make it easier for developers to create frictionless crypto experiences and for new users to join Web3 by abstracting away complexities related to approvals, allowances, and swaps. The Robinhood Wallet will be the first partner to use the Tx Relay API, which will simplify user flows and enable users to trade with any token in their wallet without upfront requests for approvals and network fees.

On-Chain

Looking on-chain, in 2023, $ADA, $MKR, and $FET have experienced significant value appreciation, with $FET witnessing a 5-fold increase since January 1st. However, these assets have also seen increased involvement of whales, which may lead to substantial price fluctuations (@Santiment).

As for ETH, on-chain data suggests that there are two main reasons why selling pressure on ETH could be low after Shanghai Upgrade. Firstly, 10.3M ETH, representing 60% of staked ETH, is currently at a loss. Secondly, the largest staking pool, Lido, holds nearly 30% of all staked ETH with an average loss of almost $1K. The average loss for all staked ETH is 24%. Typically, when participants have extreme profits, selling pressure arises, which is not the case for staked ETH at the moment. Moreover, the staked ETH that is most profitable was staked less than a year ago and has not been subjected to significant profit-taking events in the past.

Crypto Derivatives

  • BTC and ETH funding rates remained relatively flat
  • 30-day ATM IV increased to 51.05% and 56.44% for BTC and ETH respectively
  • 30-day 25 delta call skew increased to 1.61% for BTC while put skew tightened to 2.16% 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

10.68%

DOGE

DYDX

OKX

9.98%

BTC

BINANCE

DYDX

7.24%

SOL

BINANCE

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 has increased slightly to $71.17M, the majority coming from shorts.

On the options front, term structures remain in contango for BTC and ETH. While IV for both BTC and ETH increased across maturities, near-term lV on ETH has gone up significantly more. For ETH contracts that have maturities of under 30 days, IV increase yesterday ranged from 4.23% to 7.70%. 7-day RV has gone down slightly for BTC to 41.55, but down slightly to 44.29 for ETH. The variance risk premium has also seen a large increase yesterday with it going up to 5.9% for BTC and 9.6% for ETH.

On the flow side, the volume comes mainly around short-dated maturities as 3rd March expiry has seen a huge inflow in the last 24 hours. Taking a closer look at the strike prices for the BTC options expiring today, the majority of the exercise prices were concentrated within a tight range of 23.25K for puts and 23.75K for calls. On the other hand, large volumes of BTCs were hedged by put options expiring tomorrow to sell at the current price for profit. Interestingly, a large volume of call contracts was also observed tomorrow at 25K exercise price in case of the potential breakout of the significant price level at 25K.

The top option trading strategy in the last 24 hours was the long risk reversal with a $33.17M notional amount.

Lastly, the VIX dropped to 20.58 yesterday.

Crypto Technical Analysis

Onto TA, BTC broke past its 20d EMA on the daily timeframe as price spikes 2.1% overnight. The closest resistance level can be observed at $23.75K. If breached, the next strong resistance zone can be expected at around $24.5K - $25K which has been tested repeatedly in the past months.

In the daily timescale, ETH soared overnight, rising 3.72% after touching the rising channel's bottom and its 50d SMA as ETH broke past its 20d EMA. MACD is closing in on the signal line and thus shows the weakening of the previously seen bearish momentum. The next level of resistance to watch out for is $1,780 if bullish momentum maintains control and breaks through the channel to the upside.

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Yours sincerely,
Treehouse Research 🌳