🌳China's Crisis Spreads To The $2.9 Trillion Trust Industry; sDAI Gained $1B DAI Deposit In A Week

15 Aug 2023, Tuesday

3:37 AM

🌳China's Crisis Spreads To The $2.9 Trillion Trust Industry; sDAI Gained $1B DAI Deposit In A Week



S&P Futures 500







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, where Treehouse brings you financial news and insights free daily! We believe you’ll find this helpful.

Also, in case you have missed it, check out our latest research piece 👇

Our Daily View

What We Are Covering Today

  • China's economic crisis escalates as the Zhongzhi Enterprise Group defaults on its payment.; Michael Burry exits Alibaba and JD and reshuffles its equity holdings (more in Macro & TradFi)
  • sDAI gained $1B DAI in a week; Crypto lender Celsius sends bankruptcy plan to creditor vote (more in DeFi & CeFi)
  • Analysis reveals holder behavior contrasts; UTXO shows potential recovery while a major investor leverages Compound (more in On-Chain)
  • BTC's ATM IV reacts to US Retail Sales while BTC and ETH skew varies (more in Crypto Derivatives)
  • BTC and ETH continue to trade sideways and encounter their respective SMA lines which may shape their near-term price trajectories. (more in Crypto Technical Analysis)

Macro & TradFi

The Chinese shadow banking sector faces a new unease as a major private wealth manager, Zhongzhi Enterprise Group, defaults on several high-yield investment products, raising concerns about the broader health of the industry. This financial conglomerate manages approximately 1 trillion yuan ($138 billion) and its recent missed payments have prompted Chinese authorities to establish a task force to assess risks. Zhongzhi's struggles are particularly notable in the $2.9 trillion trust industry, which merges elements of commercial and investment banking, private equity, and wealth management. These events coincide with broader concerns over China's economic slowdown and property market instability, causing market jitters and triggering stock market declines. Notably, the default comes amidst a backdrop of distress in the property sector, exacerbating fears of a potential ripple effect across related industries.

Meanwhile, in a striking turnaround, Michael Burry's Scion Asset Management, known for predicting the 2008 housing crash, exited its positions in Alibaba Group Holding Ltd. and JD.com Inc. during the second quarter, despite these stocks constituting 20% of the firm's portfolio and being its top two equity holdings just a few months earlier. The fund liquidated positions in 15 companies in total, including banks that had been acquired during the prior period. Scion's new top holding emerged as Expedia Group Inc., with the hedge fund making significant changes to its portfolio by adding 25 new stakes. Notably, there is speculation about Burry's multibillion-dollar bet against the stock market through put options on major ETFs tracking the S&P 500 and Nasdaq 100, although the actual positions are more nuanced and involve long put option contracts.

U.S. stocks displayed a mixed performance for most of the day but managed to rally during the Monday session, led by a surge in tech stocks that propelled all three major indexes into positive territory. The Nasdaq experienced the most significant gains, surging over 1%, while the S&P 500 rose by 0.6% and the Dow Jones Industrial Average up by 0.1%. The market's opening was initially dampened by concerns surrounding a potential contagion effect from a Chinese real estate giant's default, impacting Asian equities earlier in the week. Notably, shares of Country Garden Holdings, a property developer, fell by 18% after signaling its intent to extend a maturing bond. Chinese automakers also faced a decline due to Tesla's price cuts, escalating an electric vehicle price war in China.

DeFi & CeFi

  • $DAI in DSR reached $1.3B, up by $1B in a week
  • Crypto lender Celsius sends bankruptcy plan to creditor vote
  • Web3 gaming platform Immutable launches zkEVM testnet
  • BALD developer sends $12m back to Ethereum
  • $HBAR surges after FedNow’s Hedera-based Dropp
  • Metaverse project The Sandbox unlocks $133M worth of tokens
  • DeFi blockchain explorer platform DeBank launches Layer 2 chain using OP Stack

Lending platform MakerDAO’s DAI Savings module saw a substantial influx of funds after the Dai Savings Rate (DSR) was bumped to 8%. In specific, MakerDAO’s liquid deposit token sDAI increased by $1.04 billion in just one week, prompting various other DeFi protocols to work on synergizing with sDAI. Most prominently, the Aave community has outlined a proposal to onboard sDAI as a collateral-only asset into the Aave V3 Ethereum pool. Although the DSR is projected to decrease to 5%, the Aave community intends to capitalize on offering users the dual benefit of earning DSR yield while utilizing their assets as collateral. Using sDAI as collateral for minting GHO, Aave’s native stablecoin, can effectively flip the latter’s borrowing cost to the negative territory as DSR is currently higher than GHO’s borrowing rate.

In other news, crypto lender Celsius Network is seeking creditor approval for its bankruptcy plan. Before and leading up to its predicament, Celsius had 60,000 customers holding ~$4.4 billion in interest-bearing accounts. Its bankruptcy plan entails partially compensating its retail customers with ~67% of their lost funds with a combination of litigation proceeds, equity shares, and crypto assets. It will also hand control of its operations, like bitcoin mining and staking, to the Fahrenheit Group. Fahrenheit will buy a minority stake in the reorganized Celsius for $50 million and publicly list its stock on Nasdaq, allowing affected customers to sell their equity shares. The reorganized company will then pursue litigation against Mashinsky, who has not pleaded guilty, for purposefully deceiving customers.


According to analysis by @Glassnode, the UTXO Realized Price Distribution (URPD) distribution split between short-term holders (STH) and long-term holders (LTH) reveals a significant cluster of STH positioned between $25k and $31k. Historically, this supply distribution mirrors patterns observed during past bear market recoveries. Yet, in the shorter term, the market appears top-heavy, with numerous price-sensitive investors nearing unrealized losses. The disparity in cost basis between the two cohorts further underscores this: STH's cost basis has increased 59% YTD, standing at $28.6k, while the LTH cohort's is considerably lower at $20.3k.

According to @lookonchain, a prominent investor has deposited 1,034 WBTC ($29.3M) and 6,550 ETH ($12.08M) into Compound. Following this, the investor borrowed 20.5M USDC and subsequently transferred the same amount to Circle. The investor effectively secured instant liquidity without liquidating their positions in BTC and ETH. This suggests a desire to maintain long-term exposure to the growth potential of these cryptocurrencies while transferring the borrowed USDC to Circle could be a move to access fiat-equivalent funds for immediate needs or opportunities. This serves as a notable instance where a large investor leverages their crypto holdings without divesting from their bullish outlook on the assets.

Crypto Derivatives

  • BTC and ETH funding rates remain positive.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remain unchanged at 35.07% and 32.16%, respectively.
  • 30-day 25-delta skew (C-P) for BTC increased to 3.01% while that of ETH dipped to -1.90%.
  • The futures market witnessed $49.19M worth of liquidations in the last 24 hours with longs representing 57.06% of the total.

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On













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

Bitcoin's ATM IV has shown a marginal uptick since the start of the week. This surge in volatility can be attributed to the anticipatory market sentiment surrounding the forthcoming US Retail Sales data scheduled to be released today. Historically, significant deviations from forecasted Retail Sales data have led to market fluctuations.

Both BTC and ETH term structures persist in a contango state. Looking back over a 1-day period, the term structure has remained largely unchanged across all tenors except the front end of the curve, which exhibits a noticeable hike in IVs 10 days from now, possibly influenced by the Jackson Hole Economic Symposium which will start on August 24.

The 7-day and 30-day (C-P) skews for BTC remain to be positive while ETH has flipped to a put skew. On a 30-day average, there is a significant deviation in the skew of BTC compared to ETH, with a spread of 4.99%. This divergence underscores a difference in market sentiment between the two leading cryptocurrencies. While traders appear to be hedging against potential declines for Ethereum, they remain relatively more bullish or neutral on Bitcoin's prospects.

The key trading structures spotted by @Paradigm for BTC in today's session included the purchase of 660x the custom strategy that paired -1.51x Call for 29-Dec-23 at $40,000 with +1.00x Call for 29-Mar-24 at $40,000. In addition, there was a notable sale of 275x 29-Dec-23 $40,000/$50,000 Call Spreads, and the purchase of 100x 29-Sep-23 $26,000 Puts.

Crypto Technical Analysis

Transitioning to technical analysis, the market has persisted in displaying a choppy nature, particularly evident in BTC's predominantly sideways movement. It maintains its proximity to the previously established trendline on the 4-hour chart. Notably, there was an uptick in price coinciding with the start of the US equity market; however, this surge was promptly met with resistance at the 200-period Simple Moving Average (SMA) line, culminating in a rapid retracement to a level aligning with the initial levels. After this episode, the price has seemingly discovered a support zone aligned with the 100-period SMA level. This confluence, in conjunction with the previously identified trendline, holds promise as a strong support level for BTC's near-term price trajectory.

Shifting our attention to ETH, a comparable scenario unfolds. ETH's price has consistently maintained proximity to the upper threshold of its channel during the preceding trading session. Regrettably, clear indications of an upside breakout remain elusive from a technical point of view. Diverging from BTC's trajectory, ETH's price has managed to breach the barriers of both the 50-period and 100-period SMA lines. Presently, it hovers slightly below these levels. Nonetheless, a definitive downward trend has yet to manifest as a consequence of this development. Should the analysis of the potential downward trajectory prove accurate, the subsequent support level aligns steadfastly at approximately $1.79K, coinciding with the lower bound of the aforementioned channel.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings



Deal Flow

Yours sincerely,
Treehouse Research 🌳