🌳China Investigates Shadow Banking Crisis; Inferno, Infamous Crypto Wallet-Drainer, Shuts Down Operations

27 Nov 2023, Monday

2:48 AM

🌳China Investigates Shadow Banking Crisis; Inferno, Infamous Crypto Wallet-Drainer, Shuts Down Operations

BTC

ETH

S&P Futures 500

$37,509.50

$2,068.00

$4,557.75

(+0.51%)

 (+0.11%)

(-0.29%)

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


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What We Are Covering Today

  • China probes shadow banking crisis; UK secures major international investment commitments (More in Macro & TradFi)
  • Inferno Drainer allegedly shutting down after helping steal $70M in crypto; dYdX to unlock 30% of token supply amounting to $500M (More in DeFi & CeFi)
  • Spark Digital Capital sells 1.93 million SUPER to Binance, leveraging recent price hike; Whale 0x915 strategically liquidates 30.4 million RLB, impacting market dynamics (More in On-Chain)
  • BTC market volatility surges; Strategic option trades highlight downside protection, future positioning (More in Crypto Derivatives)
  • Bitcoin shows ascending wedge pattern; ETH trades in horizontal channel (More in Crypto Technical Analysis)

Macro & TradFi

China's financial sector is currently undergoing intense scrutiny, as the Chinese authorities have initiated an investigation into Zhongzhi, a prominent player in the country's shadow banking industry. This probe comes in the wake of Zhongzhi admitting to a staggering $36.4B shortfall, a revelation that has heightened concerns about the transparency and stability of China's $2.9T shadow financing sector. The investigation, focusing on alleged "illegal crimes" within Zhongzhi, underscores the challenges faced by the shadow banking system, particularly its connections to the struggling real estate market and the broader economic slowdown. This situation also highlights Beijing's efforts to stabilize the property sector, which once drove over a third of China's economic growth. The ongoing crisis at Zhongzhi, along with the government's response, could significantly impact both the shadow banking and real estate sectors, potentially leading to broader economic implications for China.

UK Prime Minister Rishi Sunak is set to announce nearly £30B in long-term investment commitments from international firms at a major business summit in London, signaling a strong vote of confidence in the UK's economic future. This announcement, marking a threefold increase from the last summit in 2021, underscores the UK's attractiveness to global investors despite recent economic challenges. Key investments include IFM Investors' £10B commitment to infrastructure and energy transition projects, and significant contributions from major firms like Iberdrola and Microsoft. These investments, expected to create thousands of jobs, align with the government's agenda to stimulate the economy, which has been forecasted to remain stagnant until 2025. The summit, showcasing British innovation and attended by over 200 executives, is complemented by the government's recent £11 billion tax break for businesses, further bolstering the UK's appeal as an investment destination.

Over last Friday, the holiday-shortened trading session saw minimal movements in major US indices: the Nasdaq decreased by 0.12%, while the S&P 500 and Dow Jones Industrial Average recorded marginal gains of 0.06% and 0.33%, respectively. Notably, Nvidia's shares fell by 1.93% following the announcement of a delayed launch of its new AI chip in China, adhering to US export regulations. Market focus is now shifting towards the upcoming US Personal Consumption Expenditure (PCE) data, set to be released on Thursday, 30 November, at 21:30 SGT, which is a key indicator of consumer spending and overall economic health.

DeFi & CeFi

  • Inferno Drainer allegedly shutting down after helping steal $70M in crypto
  • dYdX to unlock 30% of token supply amounting to $500M
  • Cosmos community approves capping ATOM inflation rate at 10%
  • Indexed Finance thwarts hijackers, set to compensate 2021 victims
  • Crypto exchange Zipmex suspends trading activity in Thailand
  • CZ challenges government attempt to restrict travel before sentencing date
  • Taisu Ventures Group announces the launch of Taisu Ventures Web3 Fund

The notorious crypto wallet-draining kit, Inferno Drainer, announced its permanent shutdown after aiding phishing scammers in stealing almost $70M in cryptocurrency throughout the year. In a Telegram post on Nov. 26, the team stated its decision to cease operations but will maintain the necessary files and infrastructure for users to make a seamless transition to alternative services. Despite having facilitated over $70M in theft from more than 100,000 victims since February, the team hinted that the actual amount stolen might exceed $80M. Inferno Drainer's closure follows the shutdown of Monkey Drainer earlier this year, prompting concerns about ongoing phishing threats from other active providers like Pink Drainer and Angel Drainer, the latter of which issued an update to extend its wallet-draining capabilities across multiple blockchains.

In other news, dYdX leads an upcoming influx of significant token unlocks in December, according to TokenUnlocks data. dYdX will unlock 150M DYDX tokens, which is 30% of its supply, to investors, founders, and all past and future employees. This amounts to $500M at current prices. The DYDX token price surged on news of its delayed token unlock earlier this year, from its scheduled date in February to a later one in December. The exchange also recently suffered from a $9M “targeted attack” on its insurance fund. Other significant token unlocks include Optimism which will unlock 32M tokens ($58M) on Nov. 29, 1inch which will unlock 98M tokens ($34.5M) on Dec. 1, Aptos which will unlock 24M tokens ($180M) on Dec. 12, and ApeCoin which will unlock 15M tokens ($25M) on Dec. 16.

On-Chain

Recently, @lookonchain has shed light on the dynamic market of SuperVerse (SUPER), noting a 230% increase in SUPER’s price over the past week. In this period of growth, Spark Digital Capital, linked to two wallets, moved 1.93 million SUPER (approximately $784,000) into Binance within just three days. This significant deposit follows their withdrawal of 999,874 SUPER from Binance on August 13, 2022, at a time when the price was about $0.18. After holding for 469 days, they leveraged the recent price hike to sell for profit. This strategic action can be seen positively, as a major entity like Spark Digital Capital depositing into an exchange for sale indicates confidence in the market’s strength. However, it also warrants caution; such large-scale deposits may introduce selling pressure, potentially impacting the token’s price stability.

On the other hand, @Spotonchain reported a notable market move by a whale investor who sold 13 million RLB for 2.275 million USDC at an average price of 0.175, leading to a 6.3% drop in RLB’s price about 12 hours ago. This sale is part of a larger trend over the last two weeks, where the whale offloaded 30.4 million RLB for 5.536 million USDC at an average of 0.182, each sale resulting in a sharp price decline. The accumulated USDC was subsequently deposited into the Kraken exchange. This series of transactions indicates a strategic liquidation of RLB by Whale 0x915, markedly influencing market dynamics. The pattern of these large-volume sales and the subsequent deposit into Kraken suggest a potential shift in investment strategy, possibly affecting investor sentiment and indicating a heightened sensitivity of RLB’s market to major trades.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH fell to 53.19% and 53.85%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH fell to 5.87% and 3.90%, respectively.
  • The futures market witnessed $219M liquidations since Friday, with longs representing 52.98% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

21.20%

SOL

Binance

dYdX

13.79%

BNB

Binance

OKX

15.18%

BTC

OKX

Bybit

Source: @CexyArbBot Telegram Bot

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.


Over the weekend, there has been an increase in BTC's market volatility: the 7-day implied volatilities climbed to 49.51% from last Friday's 44.15%, and the 30-day implied volatilities also increased to 50.15%. This heightened volatility indicates that the market is expecting more pronounced short-term price movements in Bitcoin.

Meanwhile, the BTC term structure remains in contango, with IVs remaining relatively unchanged from the previous day. Notably, The flat IV for expiries from 60 days onwards suggests that investors are not expecting significant volatility in the medium to long term.

Over the weekend, there has been a discernible change in the BTC options market's 25-delta call-put skew. While the 7-day skew has seen a modest increase from 6.67% to 7.07%, the more notable movement is in the 30-day skew, which has escalated from 4.98% to 5.72%. This significant rise in the 30-day skew suggests a shift in medium-term market sentiment, with traders potentially showing increased concern for upside risk in the forthcoming month.

On Friday, during @Paradigm's US Session Hours, highlighted option flows this week emphasizing downside coverage with strategic put purchases and structured positions. Key BTC trades included the sale of 335x 1-Dec-23 38/39.5K Call Spreads and the purchase of 150x 29-Mar-24 40/50K Call Spreads. Noteworthy ETH options activity featured the purchase of 13,073x 26-Jan-24 2.6/3.2K Call Spreads and a complex custom strategy involving the buying of 3,250x 29-Dec-23 2.3K Calls coupled with the sale of an equal number of 23-Feb-24 3.6K Calls.

Crypto Technical Analysis

On the 4-hour chart, Bitcoin is demonstrating a classic ascending wedge pattern, indicating a consolidation phase with progressively higher lows and slightly higher highs within the wedge. The price recently retreated after touching the resistance level near 38K, which suggests sellers are stepping in at this critical juncture. The formation of this pattern suggests a potential for increased volatility, with a decisive break out of the wedge likely to set the next clear direction for the price. Should the lower trendline be breached, the next significant support zone is observed at 32K, which would represent a decrease of approximately 13.72% from the current price levels. Conversely, the resistance to watch on the upside remains at 38K. The RSI is hovering at 56.94, which is neither in the overbought nor the oversold territory, indicating a neutral momentum with a slight inclination towards an uptrend.

ETH is currently navigating within a horizontal channel on the 4-hour chart, indicating a consolidation phase where the price oscillates between parallel support and resistance levels. The price is hovering near the channel's upper boundary, around 2.06K USD, showing the market's indecision at a critical resistance point. The moving averages — 50, 100, and 200-period SMAs — are aligned below the current price level, which could provide layered support in the event of a downward price correction. A sustained break above the current resistance could lead to a test of higher resistance levels, while a break below could see the price target support levels, with the nearest significant one at approximately 1.89K USD, a modest 7.7% drop from current levels. The RSI at 56.85 suggests a neutral momentum, but leaning towards bullish conditions, signaling that buyers have a slight edge in the current market structure. Traders would monitor these technical elements closely for signs of either a breakout or a breakdown from this channel.

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