🌳China's Economic Recovery Slowed By Sluggish Real Estate Market; Curve Finance To Reimburse Users For $62M Hack

14 Aug 2023, Monday

3:14 AM

🌳China's Economic Recovery Slowed By Sluggish Real Estate Market; Curve Finance To Reimburse Users For $62M Hack

BTC

ETH

S&P Futures 500

$29,226.75

$1,839.00

$4,482.50

(-0.76%)

 (-0.73%)

(-0.29%)

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

GM Treehouser 🌳

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July 2023 Market Recap

Our Daily View

What We Are Covering Today

  • China's economic recovery continues to be overshadowed by a sluggish real estate market; SoftBank's move to acquire the remaining of Arm through Vision Fund 1 (more in Macro & TradFi)
  • Curve promises reimbursement for users; Former SEC official expressed doubt that SEC would approve bitcoin spot ETF applications (more in DeFi & CeFi)
  • An early PEPE investor re-invests with 100 ETH; altcoin trading enthusiasm declines as trading volumes have fallen across the board(more in On-Chain)
  • BTC's ATM IV dropped after the CPI data release followed by a noticeable uptick on Sunday (more in Crypto Derivatives)
  • BTC and ETH show sideways movement near trendlines, with ETH experiencing a fakeout followed by possible downward movement going forward (more in Crypto Technical Analysis)

Macro & TradFi

China's economic recovery continues to be hindered by a deteriorating property market, as anticipated data is unlikely to show signs of a growth rebound. Industrial output, retail sales, and fixed-asset investments are expected to have only modest increases, while property investment remains on a downward trend due to concerns over a major developer's debt crisis and declining housing sales. Heavy rains and floods have also impeded construction activity. The weak data is likely to push Beijing towards implementing more monetary or fiscal stimulus. However, the fear of a weak yuan and high debt levels is constraining stronger policy action, resulting in a cautious approach and potential lag in stimulus compared to previous downturns.

On the other hand, SoftBank Group Corp is reportedly in discussions to acquire the remaining 25% stake in Arm Ltd from its Vision Fund 1 (VF1), a $100 billion fund raised in 2017, potentially benefiting VF1 investors like Saudi Arabia's Public Investment Fund and Abu Dhabi's Mubadala. This move is seen as a way for SoftBank to deliver an immediate windfall to VF1 investors, rather than VF1 selling its Arm shares in the stock market after the upcoming IPO, which could take years and involve greater risk. The potential deal could also strengthen SoftBank's position to tap VF1 investors for capital in the future.

Most US stocks fell lower on Friday, with the S&P 500 down by 0.11%. The NASDAQ, on the other hand, finished 0.7% lower at 15,028, making it the largest two-week decline since December with a 4.6% pullback over two weeks. Notably, the Invesco QQQ Trust Series 1 ETF, tracking the Nasdaq-100, closed below its 50-day moving average for the first time since March. Apple, Nvidia, Microsoft, and Tesla, major tech stocks, all closed the week below their 50-day moving averages. Reasons for the decline include crowded positioning, rich valuations, rising Treasury yields, and missed earnings expectations. The question now is whether this tech decline will spill over into the broader market.

DeFi & CeFi

  • Curve Finance vows to reimburse users after $62M hack
  • Former SEC official John Reed Stark said current SEC will not approve Bitcoin Spot ETF
  • U.S. SEC extends review of the Ark 21Shares Spot Bitcoin ETF
  • Zunami Protocol confirms stablecoin pools attacked
  • Visa completes test of paying gas fees using fiat via Visa cards
  • Crypto derivatives exchange Blofin announces Gold Sponsorship for TOKEN2049

Following its recent hacking controversy, Curve Finance issued a statement promising to compensate users for their lost assets totaling around $62 million. Investigations are underway, and the exchange managed to recover 79% of its missing funds so far. This was after a 10% bounty was extended to the perpetrator, which prompted them to return the stolen funds amounting to ~4,821 Ether or ~$9 million as of August 12. Industry experts indicated that the attack was premeditated and done with considerable skill and resources, which also brought into the spotlight the crucial problem of software vulnerability exploitation in major DeFi protocols.

In other news, former SEC official John Reed Stark expressed his doubt that the SEC would approve recent Bitcoin spot ETF applications. The cited reasons include increasingly partisan crypto-related legislation, the former anti-crypto SEC Chair Jay Clayton's aggressive action towards crypto enforcement, alongside suggestions put forth by @BetterMarkets to the effect that allowing national securities exchanges to list and trade shares in spot bitcoin-based exchange-traded products would expose casual investors to a world of fraud and manipulation. However, he has also stated his belief that the SEC’s stance might change should a Republican president assume power, following which the pro-crypto and senior Republican SEC Commissioner Hester Peirce could become acting SEC Chair, which would pave the way for crypto-friendly legislation.

On-Chain

According to @lookonchain, an investor obtained 128B PEPE for 100 ETH (approximately $185K) at a rate of $0.000001443. This comes after a prior strategic move in April, when they acquired 542B PEPE for only 1 ETH, later selling them in May for 679 ETH, resulting in a remarkable 678x gain and a return of $1.27M on their initial investment.

Meanwhile, according to @Santiment, there is a noticeable decline in trading volumes across different cryptocurrencies, especially concerning altcoins. While several projects experience temporary divergences, it is pivotal to monitor those accompanied by increasing trading volumes, potentially indicating the underlying market opportunities.

Crypto Derivatives

  • BTC and ETH funding rates remain positive.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH remain unchanged at 33.78% and 33.43%, respectively.
  • 30-day 25-delta skew (C-P) for BTC slightly decreased to 2.01% while that of ETH rose to 1.23%.
  • The futures market witnessed $39.65M worth of liquidations in the last 24 hours with longs representing 59.59% 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

18.46%

BNB

Bybit

Binance

11.24%

ETH

dYdX

Bybit

11.13%

LTC

Binance

OKX

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

BTC's ATM IV has continued its decline from Friday going into the weekends, as Core PPI increased, adding to fears that the Fed will continue with its hawkish rhetoric. However, the market has seen a notable uptick since Sunday, pulling ATM IVs near the monthly mid-range with it currently at 28.43% and 30.26% for the 7-day and 30-day IVs respectively.

Both BTC and ETH term structures persist in a contango state. Looking back over a 1-day period, the term structure shows a small divergence in later expiries. However, the front end of the curve exhibits a noticeable rise in IVs, possibly influenced by the hawkish narrative.

Conversely, the 7-day and 30-day (C-P) skews for both BTC and ETH maintain their upward trajectory. Particularly in ETH, investor sentiment remains bullish with a preference for calls over puts.

According to @laevitas, the top traded BTC instruments in the last 24 hours include $220.2K notional of 25AUG23-28000-P $220.2K of 25AUG23-31000-C, and $146.80K of 1SEP23-27000-P. This muted trading aligns with data reported from @Paradigm, where trade volume has lowered significantly for options.

Crypto Technical Analysis

Moving to technical analysis, BTC has shown a predominantly sideways movement over the weekend, hovering close to the previously identified trendline on the 4-hour chart. While the price has slightly dipped below the Bollinger Band, a definite downside breakout of the trendline is yet to materialize as bulls and bears contend for market control. Should this level falter, the earlier analysis still holds true, pointing to the next support zone at local lows, approximately at $28.8K, signifying a potential 1.2% downside.

A similar narrative holds for ETH. A distinct breakout signal endorsing a surge above the channel's upper bound has yet to materialize. The RSI and Bollinger Band indicators similarly reflect a comparable level of uncertainty, mirroring that observed in BTC. Consequently, should the price retract from its present level, the support level remains situated around $1.79K, aligning with the lower boundary of the channel. Nevertheless, in the event of a decisive breach of the channel's confines, the subsequent prominent resistance level comes into play at approximately $1.92K.

Access institutional-grade commentary on TradFi × Crypto markets

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Treehouse Research 🌳