Aave V3 Deploys to Ethereum Mainnet; Markets Set For A Busy Calendar Week Ahead

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• Macro superweek: a slew of PMI & GDP data will come from China, EU and US (more in Macro & TradFi)
• Aave V3 Deploys to Ethereum Mainnet; $fUSD to Migrate from v1 to v2 (more in DeFi & CeFi)
• BTC active supply falls as hodlers chock up more BTC (more in On-Chain)
• BTC and ETH term structures go into backwardation (more in Crypto Derivatives)
• BTC nears Aug-22 highs as BTC is set for its most profitable January since 2013 (more in Crypto Technical Analysis)

Macro & TradFi

Here we welcome a data & central bank superweek: a slew of PMI & GDP data will come from China, EU and US, while on Thursday (SGT) both Fed and ECB will deliver fresh interest rates decisions as well as press conference comments, before wrapping the week up with non-farm payroll data. China onshore market reopens today - A50 futures traded out of Singapore had rallied more than 3% over CNY. Taiwan onshore resumes trading today, with the heavyweight TSMC’s ADR indicating over 8% upside from onshore market’s closing bell since Jan 18th.

US markets extended upside momentum last Friday; NASDAQ added 1.36%, SPX 0.38% and DOW 0.13%. Tesla shares rallied another 11% to lead the comeback of battered tech shares. US Treasury bonds closed slightly weaker as 10-year yield added 2bps.

DeFi & CeFi

• $fUSD to migrate from v1 to v2, v1 to implement liquidations
• U.S. Federal Reserve Board denies custodian bank’s application for membership
• SCRT Labs propose to work with the community to build a new secret foundation
• SBF's attorney, argues that SBF should be allowed access to the assets
• Azuki Twitter exploiter transferred the stolen 150 $ETH of 468 $ETH to Tornado Cash
• Aave V3 deploys to Ethereum mainnet
• SEC rejects joint effort by Ark Invest and 21Shares to list spot bitcoin ETF

Fantom co-founder, said that $fUSD would transition from v1 to v2. Fantom will use $fUSD v2 as a fee system on-chain and award fees in $FTM or $fUSD. $fUSD v1 will carry out liquidations. Any positions where the $fUSD debt is equal to or greater than the $FTM or $sFTM backing will be liquidated. Fantom also offers a swap tool to convert $DAI to $fUSD and settle outstanding debt.

Aave V3 has been deployed to the Ethereum mainnet. Its new feature, the High-Efficiency Mode, enables users to enhance efficiency while supplying and borrowing stablecoins and associated assets like liquid staking derivatives (LSDs). Isolation Mode allows additional assets to be offered as collateral on Aave while retaining the protocol's security. Furthermore, officials will cut the overall gas expenses linked with all functions by 20%-25%.

On-Chain

Looking at on-chain data, the amount of BTC that has been hodled or lost has reached a 5-year high pointing to a falling active supply due to holders. This can be further evidenced by the percentage of BTC last active 5 years ago reaching all-time highs.

Crypto Derivatives

• BTC and ETH funding rates remain positive
• 30-day ATM IV rose for both BTC & ETH to 55.4% and 63.5% respectively
• 30-day 25d call skew rose for both BTC & ETH to 2.04% and -0.62% respectively

For futures, total liquidations in the past 24H amounted to $86.34M, majority coming from shorts at $70.39M.

On the options front, near-dated IV increased while longer-dated IV decreased. Both BTC and ETH term structures are in backwardation. The variance risk premium for BTC and ETH increased to 16.0% and 14.4%, respectively, due to the surge in the near-dated IV. BTC's put-call ratio sits at a 3-year low of 0.39.

On the flow front, most of the volume seemed to come from near-dated options expiring on 3 Feb. On the BTC side, the most popular strategy seemed to be bull call spread.

Lastly, the VIX continues its fall to 18.51.

Crypto Technical Analysis

Looking at TA, BTC has inched closer to $24K after spiking 3.2% on Sunday. Currently, BTC has rallied 43.5% since January 1 and is poised for its best opening since 2013 when it rallied 51%. The next resistance levels to watch for are at $24.5K and $25K with many awaiting to see if BTC is able to keep its momentum and break its Aug-22 highs. Meanwhile, on the H4, the 50MA line could act as a level of support should BTC pull back.

As for ETH, it jumped 4.6% on Sunday as it looked to retest the $1.65K resistance level but has failed to reclaim the level. On the H4, ETH is unable to continue forming higher highs and may need to rely on its 100MA line for a level of support if the bullish momentum subsides.

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Daily Readings

TradFi

• China central bank to roll over lending tools to spur growth

• Hungary central bank could start "cautious" rate cuts once CPI slows, minister says

• McCarthy to discuss debt limit, spending with Biden

• Adani's $2.5 billion share sale faces crucial day after rout

• U.S. House passes bill limiting drawdowns from strategic oil reserve

• Rising interest rates have a sting in the tail for Europe's banks

Crypto

• Panama’s Supreme Court to rule on cryptocurrency legislation.

• South Korea to deploy cryptocurrency tracking system in 2023.

• Sam Bankman-Fried seeks to access FTX funds.

• White House cryptocurrency ‘roadmap’ recommends against pension funds.

• Silvergate suspends dividends to preserve ‘highly liquid balance sheet’.

• Hackers take over Azuki’s Twitter account, steal over $750K in less than 30 minutes.

• California DMV to digitize car title management system via Tezos.

• Arbitrum-based DEX Vest comes out of stealth with seed round from Jane Street, others

Yours sincerely,
Treehouse Research 🌳