Debt DAO Issues FTX Debt Token; Blowout NFP Cast Doubt On Market Upside

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Our Daily View

What We Are Covering Today

• US NFP increase almost doubled from December number; stocks gave up initial gains and bond tanked (more in Macro & TradFi)
• Debt DAO issues FTX Users Debt tokens $FUD on behalf of FTX creditors; Aave to onboard more LSDs on Ethereum V3 (more in DeFi & CeFi)
• Flows for BTC and altcoins continue to spike up (more in On-Chain)
• BTC term structure returns to contango (more in Crypto Derivatives)
• BTC is in the rising trend channel, with ETH looking to re-test its resistance zone of $1.51K-$1.66K (more in Crypto Technical Analysis)

Macro & TradFi

A massive upside surprise in US non-farm payroll increase (+517k actual vs +185k consensus) sent markets first rushing higher before giving up gains. Although seasonality played a factor in last month’s payroll counts, the number still almost doubled December’s reading and sent the unemployment rate down to 3.4%. Markets open on a mixed footing today as Asian shares gauge the Fed’s resolution and look for answers from Powell’s Wednesday speech. Over the weekend the US shot down a Chinese surveillance balloon over the Atlantic. The Chinese government claimed earlier that the balloon was launched by civilian organizations and might request compensation for equipment onboard.

US stock indices closed lower after shooting up shortly after blowout NFP. NASDAQ closed 0.41% lower after almost gaining almost 2% intraday, SPX traded 0.46% lower and DOW was down 0.21%. US Treasury yields jumped higher as bonds sold off straight away; the 10-year yield was up as much as 15bps intraday before closing out ~12bps wider.

DeFi & CeFi

• a16z utilize 15M $UNI tokens to vote against Uniswap V3 deployment to BNB Chain
• Arbitrum-based stablecoin protocol SperaxUSD exploited
• Debt DAO issues FTX Users’ Debt ($FUD) tokens on behalf of FTX creditors, Huobi lists the token
• TON launches $20M liquidity incentive program
• Cross-chain DEX Demex integrate with Arbitrum and launches $GLP vault
• WOO Ventures to airdrop tokens to WOO X and WooFi stakers
• Aave to onboard more LSDs after the Aave V3 deployment on Ethereum
• Threshold Network announce the launch of tBTC, a trust-minimized Bitcoin-to-Ethereum bridge

First up, a16z has voted against Uniswap proposal to deploy V3 on BNB Chain. The proposal, which was submitted by 0xPlasma Labs, also stated that Wormhole will be utilized for the deployment. Currently, the proposal has 33% votes in favor of it and 67% votes against it.

Next, decentralized debt marketplace Debt DAO has issued a bond token on behalf of FTX creditors. The token is called FTX User’s Debt ($FUD) and has an initial supply and circulation of 20M, representing 2% of FTX’s debt with each token priced at $1. Debt DAO will create more tokens when FTX debt amount is finalized and will redistribute the additional tokens through airdrops to FUD holders. The token has been listed on Huobi with Justin Sun backing the bond tokens.

Lastly, Aave has plans to add more LSDs as collaterals on newly deployed Ethereum V3. Currently, it only supports one LSD from Lido and is considering three other LSDs. These are cbETH, rETH and sfrxETH from Coinbase, Rocketpool and Frax respectively. The cbETH and rETH proposals have undergone voting and are set to finalize with sfrxETH proposal expected to go through the voting process in the near future.

On-Chain

Looking at on-chain, the BTC mean transaction size spiked up to record levels forming a 1-month high, last seen on 6 January 2023. Meanwhile, the Network Value to Transactions Ratio has climbed above the NVT sell territory despite the Net Value Transacted climbing to a 23-month high of 1,183.508.

Altcoins such as $Cardano, $ShibaInu, and $Hex have also seen large transactions. This has been seen on other protocols such as LRC, DYDX and Aave, which indicate that when $100K+ transactions spike in a network, it results in price shifts (@santimentfeed).

Crypto Derivatives

• BTC and ETH funding rates remain positive
• 30-day ATM IV fell to 51.8% for BTC and rose to 65.3% for ETH
• 30-day 25d call skew fell for BTC and ETH to -1.27% and -4.44% respectively

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

For futures, total liquidations in the past 24H amounted to $94.4M, majority coming from longs at $79.4M.

On the options front, near-dated IV fell due to DOVs weekend selling pressure. Term structure for BTC has reverted back to contango with a slight kink in the near-term while ETH’s term structure flattens across the curve. Volume of put-call ratio has increased for both BTC and ETH since last Friday, going from 0.54 to 1.2 and 0.62 to 0.96 respectively.

On the flow front, the bulk of the 24H volume comes from near-dated options expiring 6 Feb and 10 Feb with strike prices around the spot price. The top strategies for ETH are the bear diagonal spread, followed closely by long volatility strategies such as long strangle and long straddle.

Lastly, the VIX fell by 2.14% to 18.33.

Crypto Technical Analysis

Onto TA, BTC has fallen below the $23.3K-$24.3K resistance zone, after trying to break out on 2 February though it remains in a rising trend channel in the short term. On the daily, RSI has fallen to 62, marking its fall for over three weeks with its high at 89. If price regains its bullish momentum, it may test the resistance zone of $23.3K-$24.3K while the next support level stands at 21.4K.

As for ETH, it attempts to again test the upper bound of its $1.51K-$1.66K resistance zone from which it was heavily rejected on 21 January. With RSI holding steady at 60, the next support zone is at $1.22K-$1.30K if it loses momentum.

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Daily Readings

TradFi

• U.S. reports blowout job growth; unemployment lowest since 1969

• UK Treasury signals no new money for defense, Sky News reports

• India to ban Chinese-linked betting and loan lending apps, ANI reports

• Britain faces largest ever healthcare strikes as pay disputes drag on

• China's finance minister, central-bank governor to attend debt roundtable in India, IMF says

• Asia shares slip, dollar up as U.S. rate outlook shifts

• Downed spy balloon raises diplomatic tensions between U.S. and China.

• Optimism on Chinese stocks soars to five-year highs.

• Newmont makes $16.9 billion offer for Australia's top gold producer Newcrest

Crypto

• FTX Asks Politicians Who Received Bankman-Fried Donations to Return Money.

• StarkWare to Open Source Its Ethereum Scaling System.

• a16z votes against proposal to deploy Uniswap v3 on BNB Chain.

• Genesis unsecured creditors’ committee appointed.

• Sri Lanka against Bitcoin adoption, rejects Draper’s anti-corruption pitch.

• Biggest stories of past week: A damning report on Celsius, UK crypto regulation and more

• Filecoin Creator Protocol Labs Cuts 21% of Staff

• Options Automated Market Maker Lyra Deploys to Arbitrum Network

Deal Flow

• KuCoin Labs backs web3 social data portal Port3's $3 million round

Yours sincerely,
Treehouse Research 🌳