China's Macroeconomic Data Release Shows Challenges From All Angles; Ledger Sparks Outrage With New Recovery Feature

17 May 2023, Wednesday

3:25 AM

China's Macroeconomic Data Release Shows Challenges From All Angles; Ledger Sparks Outrage With New Recovery Feature



S&P Futures 500







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

  • China’s macroeconomic data releases fell short of expectations, showing slower than-expected post-COVID recovery (more in Macro & TradFi)
  • Crypto wallet Ledger faces backlash for its new recovery feature; BNY Mellon embraces digital assets (more in DeFi & CeFi)
  • Highest DEX volume on BNB chain in a year; bullish crossover in Bitcoin long-term holder realized price (more in On-Chain)
  • Sentiment in derivatives market shifts from negative to neutral as crypto options skew stabilizes (more in Crypto Derivatives)
  • BTC and ETH hold key support level of $27K and $1.8K respectively; ETHBTC continues to trend higher (more in Crypto Technical Analysis)

Macro & TradFi

China reported multiple macroeconomic indicators yesterday, all of which indicated a slowdown in the economic recovery. Industrial output, retail sales, and fixed investment grew at a slower pace than expected in April. The unemployment rate for young people reached a record high of 20.4%, highlighting that the recovery is not strong enough to absorb new entrants into the labor market. The weak data suggests that additional policy stimulus is needed to bolster growth. According to Haibin Zhu, Chief China Economist at JP Morgan, the central bank may take action such as lowering the reserve requirement ratio or cutting interest rates. Furthermore, the weakening global economy and reduced consumer demand for Chinese goods are further challenges for China. Property investment and the construction of new homes have declined, and the output of key construction commodities has fallen. While Goldman Sachs maintains a full-year growth forecast of 6%, some economists believe that targeted policy support will be necessary to address persistent weaknesses in the economy.

Meanwhile, Singapore-based internet firm Sea Ltd. experienced its worst day in over a year as its earnings fell short of estimates with gaming revenue declining by 43%. Despite posting a second consecutive quarterly profit, Sea's revenue only grew by 5%, and a goodwill impairment charge resulted in net income of $88.1 million, missing analysts' expectations. In response, Sea has undertaken cost-cutting measures, including job cuts and reductions in sales and marketing expenses, to improve profitability. The market reacted fiercely over the announcement with SE shares dropping 18%, representing the largest decline since February 2022. Sea's e-commerce unit, Shopee, saw a 36% increase in revenue, while its gaming arm, Garena, experienced a 43% decline. SeaMoney, the digital financial services business, saw a 75% increase in revenue.

Lastly, major US equity indices closed in red during Tuesday’s trading session. NASDAQ and S&P 500 saw a moderate decline of 0.18% and 0364% respectively while DJIA saw a larger drop of 1.01%, partially driven by the selloff of Home Depot shares after it posted its quarterly earnings. As a result, NASDAQ is now outperforming the DJIA by 18.3% year to date, the widest margin it has been since 1991. Treasury yields have also declined slightly with the 2-year and 10-year notes sitting at 4.071% and 3.526% respectively.

DeFi & CeFi

  • Ledger's new recovery feature, storing ID and recovery phrases online, has raised security concerns among users
  • BNY Mellon emphasizes digital assets over crypto, viewing tokenization as the “next wave of securitization”
  • Crypto entrepreneur Justin Sun accuses Huobi’s founder’s brother of profiting from Huobi Tokens
  • EU finance ministers unanimously approve MiCA regulations, aiming to enhance transparency and investor protection in crypto markets
  • Flashbots is Now Offering its Users Frontrunning Protection

Ledger, the crypto wallet manufacturer, faced criticism over its new feature, “Ledger Recover,” which stores user seed phrases with third-party custodians in an encrypted format. The new service, costing $9.99 per month, is designed for Nano X wallet owners, potentially providing a secure way for users to store their seed phrases without the risk of losing them. However, some members of the crypto community expressed outrage over the feature, alleging that it potentially exposes the keys to third parties and thus undermines the entire purpose of a hardware wallet. Critics also took issue with Ledger’s requirement to provide a government-issued ID to use the service, which is seen as a violation of core crypto tenets around privacy. Despite the criticism, Ledger CEO Pascal Gauthier defended its security practices and emphasized that the recovery service is optional. Ledger denied allegations that the new service amounts to a "backdoor" and stated that users maintain control over their assets.

In other news, Regelman, CEO of Securities Services and Digital at BNY Mellon, outlined BNY Mellon's plan for digital assets. The first part of the plan involves applying existing services like custody and clearing services to digital assets. This is a significant move as it indicates the bank's recognition of digital assets as an asset class on par with traditional asset classes like equities and fixed income. In his plan, Regelman also wants to explore new use cases, such as tokenization, which could lead to the "next wave of securitization", enabling smaller investors to acquire tokenized baskets of assets with lower amounts. Specifically, Regelman mentioned that BNY Mellon would start extending its services to digital assets in the next year and a half which could mark a significant shift in the traditional banking landscape.

Elsewhere, in response to the proliferation of bots and frontrunners of trades, Flashbots has developed an innovative tool to shield user wallets and decentralized applications (dapps) from front-running bot attacks. This solution addresses the surge in bots programmed to execute sandwich attacks, a tactic that has recently drawn significant attention within the crypto sphere. In addition to this, the Flashbots team is progressing on several other initiatives, including better inclusion rates, optimizing MEV payments via Flashbots Matchmaker, enhanced expressivity for users regarding their programmable private transactions, and improved nonce awareness.


Looking at last week's data from DefiLlama, weekly decentralized trading volume reached $5.11bn on BSC chain, the highest level the chain has seen since last May when DEX trading volume surpassed $10bn. Also worth noting, the previous time when trading volume briefly cross $5bn was in last November during the FTX collapse. A few factors could possibly be attributed to the recent high in trading volume: namely, the lower fees for users of the BNB chain given the recent gas spike on ETH and the deployment of Uniswap v3 on the BNB chain.

Bitcoin's long-term holder realized price refers to the average price of the long-term holder BTC supply, valued at the day each coin last transacted on-chain. In other words, it could be thought of as the 'on-chain cost of long-term holders. (Likewise, the realized price denotes this 'cost basis' of all coin holders.) According to Blockware Solutions’ weekly newsletter, the two realized prices are approaching a bullish crossover which historically has indicated the bottom of a bear market.. Recently, the BTC realized price was at $20,129, highlighting only a gap of about 3% from the LTH realized price of $20,845. It is worth noting that previous instances of such bullish crossovers on Sep 2012, May 2016, and Jun 2019, were followed by long bull runs.

Crypto Derivatives

  • BTC and ETH funding rates flipped to a slight positive.
  • 30-day ATM IV falls slightly to 46.87% and 46.81% for BTC and ETH respectively.
  • 30-day 25-delta skew for BTC has a call premium of 1.60% for BTC, while ETH remains negatively skewed at -1.27%.

Top 3 CEX USDT perp funding rate arbitrage based on 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

The futures market saw $47.65M in liquidation over the 24 hours with 61% coming from longs at $29.04M.

For options, term structure currently remains in contango as IV has remained relatively stable in the past few days with no major catalyst in sight to push it higher. The 7-day IV for both BTC and ETH is currently trading in proximity to their RV, resulting in downward pressure on the VRP and making carry trades difficult to be executed.

Following last week's price decline in BTC and ETH, the markets have shown signs of stabilization. The 25-delta skew (C-P) for both BTC and ETH has shifted from negative to neutral, indicating a change in market sentiment and expectations. This suggests a more balanced or slightly bullish sentiment, with traders exhibiting increased demand for call options and potentially reduced interest in the downside protection by put options.

In the past 24 hours, there has been a significant increase in trading activity for call options in BTC and ETH. For BTC, most of the trading volume is focused primarily around short-term tenors. On the other hand, medium-term options are much more predominant for ETH. Notably, there is also a substantial volume of long call options for ETH on medium-term dated contracts for the June and September expiries. This observation suggests a positive long-term outlook for ETH. The surge in call option volumes indicates a shift toward bullish sentiment among traders.

Based on option flows (@tradeparadigm), there is no clear consensus on the direction of the crypto markets. Notable structures include 235x 30-Jun-23 40000 BTC Calls and the selling of 2000x 29-Dec-23 2000 Calls on ETH. The top traded strategies on BTC involve directionally neutral strategies such as short strangles and iron condors.

Lastly, VIX rose 5.08% to 17.99.

Crypto Technical Analysis

Moving on to technical analysis, BTC experienced multiple instances of falling below the $27K level yesterday. However, it managed to regain stability above this level during today's Asian session. Analyzing the 4-hourly chart, Stochastic RSI reached its lowest level and exhibited a crossover, suggesting a potential upward reversal in the price action. In a similar vein, for any significant push higher, BTC would need to find a break above and gain acceptance above the ascending trendline.

Meanwhile, ETH is showing greater signs of strength in comparison to BTC. ETH has held well above the $1.8K level, even after being tested multiple times. Observing the 4-hourly chart, a well-established descending trendline can be seen. ETH has the potential to make further gains and move towards this trendline, and a successful break above it would signify additional upward momentum.

Based on the ETH/BTC pair, it is evident that ETH has been exhibiting superior performance since the beginning of May. An area of interest for a potential breakout in the ETHBTC pair is around 0.06789. If ETH manages to establish acceptance above this level, it would signify a continuation of strength and thus result in a potential bull rally.

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