Circle eliminates USDC bridges across blockchains with its Cross-Chain Transfer Protocol

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Our Daily View

What We Are Covering Today

• Singapore doubles its property taxes to foreigners to 60% in an attempt to cool the real estate market (more in Macro & TradFi)
• Circle eliminates USDC bridges across blockchains with its Cross-Chain Transfer Protocol (more in DeFi & CeFi)
• On-chain data suggests that neither the US Government nor Mt. Gox Exchange Reserve is spending any BTC despite the Arkham alert (more in On-Chain)
• Term structure inverts on the front-end; Near-term RV spikes to 60s; Majority of BTC puts placed below $28K (more in Crypto Derivatives)
• Significant volatility observed in the market with ETH struggling to recover and break the current resistance zone (more in Crypto Technical Analysis)

Macro & TradFi

Singapore is taking measures to address concerns about the housing market's affordability for locals and competitiveness as a financial hub. The government is increasing stamp duties for second-home buyers and foreigners buying private property. For local Singaporeans and Permanent Residents, the Additional Buyer’s Stamp Duty (ABSD) has increased between 3% and 5% for purchases of their second and subsequent property, and the ABSD for foreigners has doubled from 30% to 60%. The property sector in Singapore has remained buoyant despite slowdowns in other countries due to soaring interest rates and inflation, which, in turn, has led to an enormous surge in rent over the past year.

Meanwhile, Meta Platforms Inc. reported better-than-expected quarterly revenue and user growth, buoyed by a rebound in digital advertising sales. The social media giant's stock climbed 74% this year, and CEO Mark Zuckerberg said generative Artificial Intelligence (AI) would impact all of the company's apps and services. While Meta spent months cutting costs, it is now focusing on speculative businesses such as AI and virtual reality. The company added that it is still willing to hire in some areas, such as generative AI. Despite setbacks in the Reality Labs division, Zuckerberg said the company is committed to both AI and the metaverse. Consequently, following the earnings call, Meta shares gained more than 12% in after-market trading.

Despite the positive earnings results from Meta and Microsoft in the last few days, major US indices remain relatively flat. The S&P 500 lost 0.39%, whereas the DJIA fell by 0.69%. The Nasdaq Composite, however, gained by 0.46%, driven by overperformances in large technology stocks such as Microsoft and Alphabet. On the other hand, the yield on 2-year and 10-year US Treasury notes remained relatively flat at 0.928% and 3.435%, respectively.

DeFi & CeFi

• Credora closes $6M round led by S&P Global and Coinbase Ventures
• Omni Network closes $18M round with participation from Pantera Capital and Jump Crypto, among others
• Merlin exploited after the CertiK audit, CertiK to launch compensation plan for $2M Merlin DEX exploit
• iZUMi Finance raises $22M through semi-fungible tokens (SFTs)
• Circle launches Cross-Chain Transfer Protocol (CCTP) between Ethereum and Avalanche
• Trust Wallet introduces MPC technology that enables simplified access using existing social media account
• MeWe social network with 20M users to integrate with Polkadot parachain
• South Korea’s sweeping crypto bill passes first regulatory hurdles

Circle, the issuer of USDC stablecoin, has launched a new protocol named Cross-Chain Transfer Protocol (CCTP) which enables users to natively transfer USDC between Ethereum and Avalanche networks. The protocol eliminates the need for USDC bridges and allows for USDC transfers between blockchains via native burning and minting. Unlike cross-chain liquidity pool solutions, CCTP doesn’t require pooled USDC liquidity, increasing capital efficiency and avoiding fees charged by liquidity providers. Circle has also announced that the expansion of the protocol to other chains is expected in 2023. This new protocol solves the issue of fragmentation in the Web3 ecosystem and enables developers to build mainstream experiences that stack together functions like trading, lending, payments, NFTs, gaming, etc.

iZUMi Finance, a multi-chain DeFi protocol that offers a one-step liquidity-as-a-service (LaaS) platform and will be available on the zkSync Era network, has raised $22 million in funding for its on-chain order book decentralized exchange, iZiSwap Pro. The funds will provide early liquidity for the new Automated Market Maker (AMM) order book decentralized exchange that aims to reduce transaction costs and mitigate custody risks. The funding was raised through an iZUMi zk-Fund, a semi-fungible token (SFTs) representing investors’ shares; investors become limited partners of the fund and can redeem their shares for their principal when it matures.

The semi-fungible token (SFT) is a token standard issued by Solv Protocol to represent a non-fungible token (NFT) with the quantitative attributes of a fungible token, allowing transactions, splits, and merges of the underlying token.

On-Chain

On 31 March 2023, court documents indicated that the US Government plans to sell over 41,000 BTC, seized in connection to the Silk Road case of James Zhong, in four tranches throughout 2023. This news raised concerns about the potential selling pressure on the Bitcoin market. The first chart above tracks the balance and transfers of Bitcoin seized publicly by the US Government, while the second chart tracks the total number of Bitcoin in the Mt. Gox Exchange Reserve. These charts provide valuable insights into two significant events that have the potential to impact the Bitcoin market. On-chain data suggests that neither the US Government nor Mt. Gox Exchange Reserve is spending any BTC from the addresses monitored by @glassnode.

Earlier today, blockchain analytics firm Arkham reported that wallets associated with Mt. Gox and the US government had moved significant amounts of Bitcoin, leading to a 7% drop in BTC price within an hour. However, it was later clarified that the alert was due to a "bug fix" as others analyzed onchain movements of these wallets without any findings.

Crypto Derivatives

• BTC and ETH funding rates remain positive
• 30-day ATM IV rose to 52.40% and 54.28% for BTC and ETH respectively
• 30-day 25-delta skew flipped to call premium for both BTC and ETH at 2.94% and 0.02% respectively

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

The futures market experienced $318.912M worth of liquidations in the last 24 hours from both longs ($189.63M) and shorts ($129.27M) largely caused by the volatilities in the market partially driven by Arkham's false alert on the BTC movements.

In the options market, BTC and ETH saw a surge in near-term implied volatility (IV), resulting in an inverted front end. As prices rallied, the skew flipped to call premium, with BTC and ETH call skew sitting at 2.94% and 0.02%, respectively. The 7-day realized volatility (RV) also saw a significant increase, with both major cryptocurrencies hovering around the 60s, likely due to short terms largely swings experienced in the market. As a result, the risk premium flipped to negative, reaching -2.81% for BTC and -2.45% for ETH.

On the flow side, BTC futures volume hit a 3-month high of ~$100B. As for options, BTC traders appeared bullish on the 28 Apr end-of-month contract with calls volume more than twice of puts. The rally caught the bears off-guard as most of the end-of-month puts were placed below $28K. If BTC remains at around $29K by expiry, the bulls would be expected to profit $445M over the bears.

Noteworthy trades around BTC 28 Apr contract include buying 376 contracts $31K calls and selling 375 contracts $30K calls, presumably to profit from the elevated IV.

Finally, the VIX climbed further to 18.84.

Crypto Technical Analysis

On the TA front, the crypto market experienced significant volatility last night, with BTC gaining 5.7% in a short 4-hour timespan, followed by an immediate dump of 8.6% only 6 hours later. The volatility is less driven by price technicals and more by fundamental sentiment following the news that the US government is potentially moving its BTC holdings. However, despite the price crash, BTC has held firm on the $27.8 support zone and has broken through the $28.8K resistance. If the price continues with bullish momentum, it will likely test the local highs at a resistance level of roughly $30.4K. Lastly, the RSI has stayed in the normal range despite the volatilities and is currently sitting at 58.1 on the 4H timeframe.

Similarly, ETH has followed a similar price trajectory as BTC. However, despite the massive dump, the ETH price has respected the previous technical support zone at $1.83K. Zooming closer to the 1H timeframe, even the lower point during the dump has respected the historical trendline formed by the lower lows. Moving forward, however, price has struggled to break through the $1.92K resistance. If it successfully breaks through, the next resistance zone can be observed at $1.92K. On the other hand, rejection to the downside will likely move ETH back toward the support zone at $1.83K. Like BTC, the RSI has stayed in the normal range and is currently at 54.4 for the 4H timeframe.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Read Past Issues

Daily Readings

TradFi

• Samsung flags H2 recovery after record chip loss in Q1

• Teck Resources withdraws plan to split, shares jump as Glencore circles

• SVB's former parent may need new funding after $2 billion cash seizure

• First Republic faces potential curb on borrowing from Fed, Bloomberg reports

• House Republicans pass debt-ceiling hike, hoping to spur Biden to talks

• BlackRock adds Treasuries as debt ceiling jitters intensify

• Vietnam EV maker VinFast secures $2.5 billion in fresh funding pledges

• Germany expects deficit of 4.25% of GDP in 2023, finance minister says

• Argentina to pay for Chinese imports in yuan rather than dollars

• US debt ceiling technical default seen at 2%-3%, says Summers

• Tech CEOs wax poetic on AI, big adds to sales will take time

• German consumer morale picks up on income expectations

• Australia inflation slows in Q1, market leans against rate hike

• BOJ's Ueda sees tough balance in combating cost-push inflation

Crypto

• Bitcoin Could Be 'Great' Investment for IRA or 401K Plans.

• Ex-CFTC Head Says Regulators Can Engage With Crypto 'If They Have the Will to Do So'.

• A $1.4T Financial Giant Expands Its Money Market Fund on Polygon.

• SushiSwap to Propose Tokenomics Changes to Promote Uniswap v3 Adoption.

• Leader of Miami Trio Pleads Guilty to $4M Bank, Crypto Fraud Charges.

• Circle Unveils New Method for Moving USDC Between Blockchains.

• Social Media App MeWe to Bring Frequency Blockchain's Self-Sovereign Identity to Its 20M Users.

• Bittrex Global CEO Says Firm Will Fight SEC Charges, Did Not Serve U.S. Customers.

• Arkham denies buggy Mt. Gox alerts to blame for 7% Bitcoin price crash.

• Silicon Valley-based tech accelerator expands its digital asset vertical to France.

• Web3 social media protocol launches ‘layer 3’ to provide instant posts.

• Bahamas securities watchdog presents comprehensive new draft digital assets act.

• CertiK to launch compensation plan for $2M Merlin DEX exploit.

• South Korea’s sweeping crypto bill passes first regulatory hurdles.

• Arbitrum decentralized exchange IAO cancelation draws controversy.

• Binance.​US enables Web3 domain creation for American users.

• Trust Wallet Introduces MPC Technology Enables Simplified Access using Existing Social Media Account

Deal Flow

• Cata Labs Raises $4.2M to Develop 'Bridging' Software.

• iZUMi Finance Raises $22M by Issuing semi-fungible tokens (SFTs) to Investors

Yours sincerely,
Treehouse Research 🌳