🌳 Banks Face Over $9B Of Real Estate Loans; $STRK Launches As The Starknet Native Token

21 Feb 2024, Wednesday

2:46 AM

🌳 Banks Face Over $9B Of Real Estate Loans; $STRK Launches As The Starknet Native Token

BTC

ETH

S&P Futures 500

$52,171.61

$3,001.84

$4,983.50

(+0.98%)

 (+2.22%)

(-0.62%)

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


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Our Daily View

What We Are Covering Today

  • US banking giants face tripling of real estate debt; Nvidia faces potential turning point amidst upcoming earnings report (More in Macro & TradFi)
  • $STRK launched and surpassed $7 on Binance; OP airdrops over $40M to NFT artists (More in DeFi & CeFi)
  • Ark 21Shares and Fidelity added $253.6M worth of BTC; Tether Treasury mints another $1B USDT (More in On-Chain)
  • BTC IV decreases as traders anticipate a short-term consolidation period with sideway price movements (More in Crypto Derivatives)
  • BTC challenges $52K resistance; ETH tests pivotal $3K level amid overbought conditions (More in Crypto Technical Analysis)

Macro & TradFi

The largest U.S. banks, including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley, face heightened pressure as bad loans in the commercial real estate sector outpace their loss reserves, signaling potential financial instability. This shift has sparked concern among regulators, including Michael Barr of the US Federal Reserve, who emphasized the close monitoring of banks' commercial real estate (CRE) lending practices and risk reporting. The broader U.S. banking sector also reflects this trend, with delinquent loans linked to commercial properties more than doubling last year to $24.3B, reducing the reserves to loan delinquency coverage to its lowest in over seven years. The banking industry's reliance on historical loss rates for setting aside reserves, especially for commercial properties like office spaces, is being questioned in the wake of the pandemic's lasting impact on work patterns and commercial property valuations. Experts argue for a more forward-looking approach to predicting potential losses, rather than depending solely on past data. Despite these challenges, some banks maintain that their reserves against delinquencies were adequately high a year ago. They are now being appropriately adjusted in response to rising delinquencies, with Bank of America's CEO expressing confidence in their current risk management strategies.

Investors in Nvidia Corp. are on the edge of their seats as the upcoming earnings report is anticipated to trigger a massive fluctuation in the company's market value, potentially swinging by nearly $200 billion. This level of volatility shows the significant impact that Nvidia's performance can have, given its substantial contribution to the S&P 500's gains this year, especially amidst the ongoing artificial intelligence boom that has seen the stock triple over the past year. The anticipation builds upon a year of remarkable performance for Nvidia, marked by its status as the S&P 500's top-performing stock, driven by soaring demand in its data center business. Nvidia’s rally has led to a complex sentiment among investors, between concerns over escalating valuations and the fear of missing out on further gains. Consequently, many are opting for upside calls as a way to participate in potential growth with limited risk. With options activity indicating significant interest in calls with strike prices ranging up to $1,380, the market is bracing for possible outcomes that could see the stock either retract by 15% or advance by 17%, highlighting the high stakes surrounding Nvidia's financial update.

On Tuesday, the stock market faced a downturn, primarily influenced by Nvidia's significant drop of 4.35% ahead of its crucial earnings report, marking its biggest daily percentage fall since October 17. This decline played a pivotal role in the broader tech sector's performance, with the Philadelphia semiconductor index (SOX) also falling by 1.56%. The tech-heavy Nasdaq Composite bore the brunt of the sell-off, losing 144.87 points or 0.92%, closing at 15,630.78, while the S&P 500 dipped by 30.06 points or 0.60%, ending the day at 4,975.51. In contrast, Walmart’s stock soared to an all-time high, buoyed by a strong fiscal year sales outlook and a 9% dividend increase, which helped mitigate losses on the Dow Industrials, which fell modestly by 64.19 points or 0.17%, to 38,56.80. Amidst the broader market retreat, Discover Financial surged 12.61% following news of Capital One's $35.3 billion acquisition deal.

CeFi & DeFi

  • Starknet launches $STRK
  • $OP airdrop significantly rewards NFT artists
  • BlackRock labels BTC as ‘progress’ in latest spot Bitcoin ETF ad
  • ZKM launches ‘zkVM’
  • Concerns mount over Ethena’s USDe yield

The Ethereum layer-2, Starknet has launched it’s distribution of its native STRK token on February 20th, witnessing a claim of over 45 million tokens within the first 90 minutes through its provisions portal. This launch not only marked a pivotal moment for Starknet but also saw the STRK token achieving a notable trading value, surpassing $7 on Binance and exceeding $5 on KuCoin as it began trading across major exchanges. This surge in value and the widespread interest reflected in the token's market capitalization, valued at over $2.1B, showed the crypto community's anticipation and reception of Starknet’s native token. Over 1.3 million wallets were eligible for the claim, spanning Ethereum solo and liquid stakers, Starknet developers, users, and contributors from beyond the Web3 space. In parallel, the Starknet Foundation has laid out comprehensive plans for the STRK token's utility within the network, allocating more than 700 million tokens across nine categories for governance and transaction fees and outlining future staking mechanisms. However, the launch has not been without its challenges, as the protocol navigated feedback from the community regarding the eligibility criteria for the STRK airdrop. Addressing the concerns of those who felt overlooked, the Foundation is actively seeking resolutions, demonstrating its commitment to inclusivity and fairness in the rapidly evolving landscape of Ethereum’s layer-2 solutions.

Optimism's fourth airdrop significantly rewarded NFT artists, distributing over 10.3 million OP tokens, valued at around $40.8 million, to nearly 23,000 addresses. This latest airdrop, which ran from January 10, 2023, to January 10, 2024, targeted creators who have actively contributed to the ecosystem by producing engaging NFTs on both Ethereum's mainnet and Optimism's Superchain. The rewards were intricately designed to reflect the community's engagement with the NFTs, offering more OP tokens to creators whose works spurred higher gas usage due to minting or trading activities. With a comprehensive bonus system in place to further boost token allocations for early and active contributors, this airdrop not only underlines Optimism's commitment to nurturing its creative community but also sets a precedent for valuing artist contribution in the Layer 2 space. As Optimism plans for future airdrops from its remaining 560 million OP reserve, the continuous refinement of its reward mechanism aims to foster a robust and engaged community while reinforcing its position in the evolving web3 landscape

On-Chain

An on-chain analysis by Lookonchain showed evidence of Ark 21Shares adding 2,700 BTC worth $138.3M and Fidelity adding 2,252 BTC worth $115.3M. This represents continued institutional interest in Bitcoin as an asset class with major players like ARK and Fidelity lending credibility and potentially driving further adoption. This move could also be a sign of a bullish signal as it correlates with Bitcoin rallying to a new 2024 high as well as Bitcoin futures open interest yearly high.

In another on-chain analysis, it was noticed that the Tether Treasury has minted $1B USDT, with a whale wallet receiving $70M of the $1B from Tether Treasury and depositing it to various exchanges. This mint and transfer indicates possible demand for crypto market liquidity or meeting exchange requests. Overall, it affects the broader crypto market ecosystem and traders positively with this influx of liquidity. To date, Tether Treasury has minted a total of $14B USDT while the whale wallet has received $3.45B from it since Oct 20, 2023.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH dropped to 55.40% and 60.91%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH dropped to 3.21% and 4.00%, respectively.
  • The futures market witnessed $290.42M worth of liquidations, with longs representing 66.97%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

41.72%

BNB

Binance

OKX

28.67%

BNB

Bybit

OKX

26.46%

ETH

OKX

dYdX

Notes:

1) Pairs observed include BTC, ETH, SOL, BNB, XRP, LTC, and DOGE vs. USDT perps. 

2) CEXs observed include Binance, Bybit, OKX & dYdX.

3) Lookback period is 24 hours.


The decline in BTC's ATM IVs indicates that the market is anticipating relatively stable price action in the near future, as BTC struggles to surpass its $52K resistance zone. This suggests a period of potential consolidation or sideways movement, as volatility subsides and traders await clearer signals for the next directional move.

The Term Structure of BTC further confirms this sentiment, with shorter-dated contracts experiencing a decrease in IVs while the overall structure remains predominantly in a contango state. This pattern suggests that while short-term volatility expectations are diminishing, there remains a potential expectation of gradual price appreciation over time, as reflected in the contango structure.

The BTC 25-delta skew continues its decline in both the 7-day and 30-day periods, indicating that a larger portion of the market may be anticipating a price reversal if BTC fails to breach the $52K resistance level. This decline in skew suggests a shift in sentiment towards a more cautious outlook, with traders hedging against potential downside risks in the near term.

Lastly, during the Americas Trading Session, @Paradigm reported that the flows were concentrated on ETH contracts while the BTC market remained quiet, with just a 200x 29-Mar-24 55K Call bought. Notable ETH trades included the sale of 3,000x 29-Mar-24 2.8K/3K Call Spread, 3,000x 28-Jun-24 4K/6K Call Spread, and 2,500x 26-Apr-24 4K Call.

Crypto Technical Analysis

On the daily chart, BTC exhibits a steadfast presence at the $52K threshold, indicative of a significant psychological and technical barrier. This level is being tested as a formidable resistance zone, which if overcome, may open a pathway toward the next notable resistance situated approximately at $56K, translating to an approximate 7.7% increment from the current price point. Should the $52K level fail to hold, the asset could find a support cushion near the $47K mark, a descent of nearly 9.6%. RSI is currently at 76.36, suggesting that the momentum is in an overbought territory, which often precedes a potential retracement. The convergence of these technical elements underscores the critical juncture at which BTC is trading, with market participants vigilantly observing whether the momentum can sustain a break above the $52K resistance.

Moving on to ETH, it has ascended to test the $3K mark on the daily chart, a psychologically and technically significant resistance level. A conclusive breach above this threshold could potentially pave the way to further upside, with the subsequent resistance level lying around $3.4K, a notable level from April 2022, and would represent a 13.27% increase from the current level. On the downside, should Ethereum fail to sustain its momentum above $3K, we might witness a retracement towards the support region near $2.7K, implying a potential decline of 10%. The RSI indicator, currently positioned at 72.57, suggests that the market is venturing into overbought territory, hinting at the possibility of an impending consolidation or pullback as the market digests the recent gains. The convergence of the RSI reading with the resistance test at $3K underscores the critical nature of this juncture.

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