CEXs Announce $ARB Token Listing; Microsoft Partners With Consensys For New Web 3 Wallet on Edge Browser

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• JPM in talks with First Republic for a potential new investment; Credit Suisse writes off all of its AT1 bonds while equity holders receive compensation (more in Macro & TradFi)
• Multiple CEXs to list Arbitrum $ARB token; Microsoft working on new Ethereum-based crypto wallet for Edge browser; DefiLlama drama put to rest (more in DeFi & CeFi)
• Bitcoin MVRV Momentum Oscillator flips back to positive (more in On-Chain)
• Sentiment ahead of FOMC meeting remains mixed with significant closing and opening of risky positions (more in Crypto Derivatives)
• ETH coming down from the double top while BTC also sees a decline of bullish momentum (more in Crypto Technical Analysis)

Macro & TradFi

JP Morgan CEO Jamie Dimon is discussing a potential investment in First Republic Bank with other big banks, following $70 billion in customer withdrawals since Silicon Valley Bank collapsed. The bank has a large share of uninsured deposits, making it vulnerable to a bank run. Options being discussed include an investment by the banks themselves to boost the bank's capital. Flagstar Bank has agreed to take over $38.4 billion of Signature Bridge Bank's assets, with the FDIC establishing bridge banks to allow depositors quick access to their funds. Digital assets and crypto-related assets or deposits will be returned to customers directly.

Meanwhile, following the emergency merger of Credit Suisse with its rival bank, UBS, roughly $17.3bn of Credit Suisse's additional tier one bonds (AT1s) will be completely written down, according to Switzerland's financial regulator, Finma. In a statement, Credit Suisse said that Finma had informed the bank that the bonds would be “written off to zero.” Equity holders will be compensated with equivalent UBS shares based on 0.70 Swiss Francs per Credit Suisse share. This is seen as a shock as AT1 bondholders lost any recovering value yet usually equity investments are classed as secondary to AT1 bonds.

Lastly, major indices rose slightly, with NASDAQ, DJIA, and SPX up by +0.38%, +1.20%, and +0.89%, respectively. Treasury yields have stayed relatively flat with 2-year and 10-year Treasury yields currently at 3.990% and 3.485%, respectively.

DeFi & CeFi

• Coinbase and Binance to list Arbitrum $ARB token, BitMEX launches Arbitrum futures contract
• DefiLlama internal rift resolved, no Llama token planned
• Euler Finance hacker sends on-chain message to Euler, offering to begin communication
• Hong Kong Monetary Authority working on regulatory regime for stablecoins by 2024 with over 80 crypto firms eyeing presence in the country
• Tether issues an additional 1B USDT on the Tron network with a total of 4B USDT issued in the past 7 days
• Gamma.io emerges as the latest player in the battle for Bitcoin NFT dominance
• Microsoft Edge tests built-in Ethereum Web 3 wallet, currently in a limited testing phase

Multiple exchanges are preparing for the upcoming Arbitrum ($ARB) airdrop scheduled for March 23. Binance will list ARB/BTC and ARB/USDT spot trading pairs on the day itself at 17:00 (UTC), while Coinbase has added $ARB to its listing roadmap. Meanwhile, BitMEX launched an ARBUSDTM23 futures contract with up to 20x leverage which is currently trading above $1.

The DefiLlama team issued an apology on Twitter for the events that unfolded after an internal dispute caused between the company's two co-founders over a potential token launch. Currently, there is no llama token in the works and the forked website will redirect back to the original website.

Lastly, Microsoft is reportedly testing an Ethereum-based Web3 wallet for its Edge browser that allows users to send and receive digital assets and NFTs. The wallet is in a limited testing phase and is not yet available to the public. It is non-custodial, meaning users control their funds and the tech giant will not have access to their passwords or recovery keys. Users can manage multiple Ethereum accounts and choose between the built-in Edge wallet or an extension. Microsoft has also partnered with Consensys to provide a swap feature supporting ETH, DAI, UNI, USDC, and USDT. The beta version of the wallet also includes a news section to track industry developments and the ability to connect to decentralized apps.

On-Chain

The daily average of Bitcoin transactions has reached its highest level since April 2021, with 309.5k/day this week, surpassing the yearly average. This level of activity has only been seen on fewer than 12.2% of all days, indicating a healthy trend. The number of unique new entities (i.e. new users) operating on the Bitcoin blockchain has also increased, with 122k new entities/day, only surpassed by the adoption rates seen during the 2017 peak and the 2020-21 bull run on just 10.2% of days (@glassnode).

Furthermore, MVRV Momentum Oscillator is currently breaking above 0, which is a useful tool to identify macro shifts in the market. This indicator is sensitive to events where large proportions of coin supply are bought above or below the spot price, and quickly revert to holding a profit or loss near cycle inflection points. The positive flip in MVRV Momentum indicates that a significant portion of the coin supply was acquired below the current price and is now back in profit. Previous instances of positive flips also tend to coincide with an increase in network adoption and on-chain activity (@glassnode).

Crypto Derivatives

• BTC and ETH funding rates fall to 0.0071% and 0.0082% respectively
• 30-day ATM IVs decreased to 64.03% and 62.35% for BTC and ETH respectively
• 30-day 25 delta call skew falls to 6.11% and 4.70% for BTC and ETH respectively

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

For futures, total liquidations over the past 24 hours amount to $156.82M with the majority coming from longs at $109.9M.

On the options front, term structure remains in backwardation. IV fell across the curve for ETH with a larger drop in the near to mid-term, resulting in a relatively flat term structure apart from the kink in the near term. RV seems to ease as it falls below 80% for BTC. Variance risk premium remains in the negative territory at -9.36% for BTC while ETH flips back to negative carry at -4.81% as IV falls by 8%.

On the flow side, there is some upside buying on BTC with call spreads – 2.15K contracts of 26 May 32K/36K call spread and 1.05K contracts of 7 Apr 33K/38K call spread. There are also some closing of risk positions on both BTC and ETH – 1K contracts of 30 Jun 35K call sold for BTC and 10K contracts of 31 Mar 1.9K/2.2K call spread sold for ETH. Looking at the 24 Mar option volume (post-FOMC), there is a large volume of 30K call options bought, however, the overall sentiment seemed to be neutral without an obvious skew to calls or puts.

Lastly, the VIX fell to 24.15.

Crypto Technical Analysis

On the TA front, bullish momentum for BTC has slowed down. While the price has broken through the lower bound of the rising triangle that was previously seen in the 4H timeframe, further confirmation is needed to invalidate the bullish thesis. However, when zooming into the 1H chart, a new symmetrical triangle is formed. This change of triangular direction has further confirmed the shift in the balance between bulls and bears. If the price breaks the lower bound of the new symmetrical triangle, BTC will likely test the previous upper trendline at roughly $26.75K for a rebound, while the upper resistance remains the same at roughly $31K if the price breaks through the upper bound instead.

Meanwhile, ETH’s double top pattern has played out with price now trading at roughly $1.75K, below the previous resistance zone. Going forward, price may re-test the upper trendline at 1.82K if it breaks through the resistance. On the other hand, if price continues to drop, we may see support at $1.63K which can potentially form a head and shoulder with the resistance acting as the shoulder line. Lastly, RSI continues to be within the normal range and is currently at 49.7 and 59.9 respectively for 4H and 1D.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Read Past Issues

Daily Readings

TradFi

• EY's 'paused' split dragged into $2.7 bln London lawsuit

• ECB's Holzmann waters down call for three more rate hikes

• UBS mulls sweeteners to keep Credit Suisse wealth bankers - source

• Uncertainty reigns as Fed considers interest rate hike

• IMF approves nearly $3 bln bailout for Sri Lanka

• Canada's banking regulator reaffirms creditor hierarchy after Credit Suisse deal angers bondholders

• Credit Suisse AT1 bondholders consider possible legal action -law firm

• Biden uses first veto to defend rule on ESG investing

• German regulator allows SVB to conduct lending business through local branch

• First Republic shares tumble again as liquidity fears linger

• Bank stocks gain as markets digest Credit Suisse rescue

• Oil prices rebound after hitting lowest since 2021 on banking fears

• Goldman Sachs lowers euro zone growth forecast; sees no growth for UK

• Japan says banking system stable, plays down risk of contagion

• Xi and Putin hold talks on Ukraine, deeper ties between China and Russia.

• Amazon to lay off 9,000 more workers in addition to earlier cuts.

Crypto

• Render Network Eyes Solana Migration Ahead of Network Changes.

• Decentralized Exchange Camelot Crosses $100M in TVL Ahead of Arbitrum Airdrop.

• Core Scientific Bankruptcy Judge Approves Transfer of Over $20M of Equipment to Its Exclusive Energy Negotiator.

• Immutable and Polygon Labs Team Up to Expand the Web3 Gaming Ecosystem.

• Florida Gov. Ron DeSantis Proposes Law to Ban CBDCs.

• Origin Protocol Considers Subsidizing OGN Rewards After Joining NFT Royalty Wars.

• Crypto.com Moves Closer to an Operational License in Dubai.

• EU’s MiCA Crypto Law Debate Scheduled for April 18.

• FTX’s Bahamas Arm a ‘Nullity’ That Should Be Stripped of Assets: Court Filings.

• Crypto Fear and Greed Index hits highest level since Bitcoin’s all-time high.

• Mastercard to settle transactions for stablecoin wallet in APAC.

• Manta Network seeks to bring privacy to nonfungible crypto assets with new NPO platform.

• Coinbase pauses support for Signature Bank’s Signet: Report.

• GameFi project Gala files $28M lawsuit against pNetwork.

• Binance Will List Arbitrum ($ARB)

• BitMEX Launches Arbitrum Futures Contract

• NFT wash trading increases by 126% in February - Data

Yours sincerely,
Treehouse Research 🌳