Demand-Driven Inflation Scares Markets Amid China Reopening; SBF Borrowed From Alameda To Acquire Robinhood

28 Dec 2022, Wednesday

3:11 AM

Demand-Driven Inflation Scares Markets Amid China Reopening; SBF Borrowed From Alameda To Acquire Robinhood

BTC

ETH

S&P 500 Futures

$16,682.75

$1,208.50

$3,852.75

(-1.10%)

 (-1.36%)

(-0.98%)

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

  • Chinese assets outperformed western counterparts as narratives diverge (more in Macro & TradFi)
  • SBF Borrowed From Alameda To Acquire Robinhood; Trader Joe live on Arbitrum; Syntropy switches to Cosmos for Web3 development (more in DeFi & CeFi)
  • Layer 2s currently processing as many transactions as the ETH Mainnet (more in On-Chain)
  • ETH traders expecting price volatility with straddle (more in Crypto Derivatives)
  • BTC breaks below its range support, ETH holds ground (more in Crypto Technical Analysis)

Macro & TradFi

US and EU markets came back from Christmas break on a weaker footing, as inflation concern once again took the centerstage amid stronger demand-side pressure is expected from China’s reopening. Chinese assets outperformed with Shanghai’s SHCOMP closing almost 1% higher led by ports and travel stocks; HK markets resumed trading today with HSI futures pointing to a ~2% opening gain. Meanwhile, on the geopolitics front, Russia responds to price-cap on its oil exports by imposing an export ban on the cap participants and threatens Ukraine to surrender sovereignty of Russia-occupied territories. In North America, extreme winter weather is sweeping across the continent and disrupted travel plans; Southwest canceled ~60% of their flights on Tuesday.

US stocks mostly closed lower alongside bonds driven by inflation fear. NASDAQ sold off 1.4%, S&P 0.3% and DOW managed to close around flat. US 1o-year Treasury yields jumped 12bps to wrap the session around 3.85%, a 30bps widening since Dec 19 when the benchmark yield formed a double bottom around 3.5% area.

DeFi & CeFi

  • Court documents reveal that SBF borrowed from Alameda to acquire Robinhood
  • aelf Blockchain establishes aelf DAO
  • Trader Joe live on Arbitrum
  • Syntropy switches to Cosmos for Web3 development
  • Raydium community opens voting on user compensation proposal
  • Krystal supports DeFi services on Solana
  • Waves Founder Releases Waves 2.0 Plan
  • Neutrino community accepts turning $USDN into a multi-collateral asset with a soft peg

In April and May, former FTX CEO Sam Bankman-Fried and co-founder Gary Wang borrowed $546 million from Alameda through promissory notes, court filings show. They capitalized Emergent Fidelity Technologies Ltd., the shell company that purchased 7.6% of Robinhood in May. BlockFi, FTX Group, and SBF have all tried to claim the $440 million worth of Robinhood’s shares. BlockFi claimed that SBF's early November arrangement entitles it to Robinhood shares. Shockingly, the shares were pledged as security for a loan taken out by Alameda Research, the same entity that bought them at first.

The Neutrino community approved turning $USDN into a multi-collateral asset with a soft peg. 99% of voters support it. $WAVES, $WX, $VIRES, $SWOP, $EGG, and $WEST will now back USDN. The Waves ecosystem teams ($WX, $VIRES, $SWOP, $EGG, and $WEST) will give $15 million of every project's token directly to Neutrino.

Lastly, Syntropy, a Distributed routing protocol, discontinued their Substrate-based Validator application on Amber Chain and switched from Polkadot to Cosmos. Syntropy stated its development team struggled with the Substrate architecture and chose the Cosmos blockchain for its use cases. Syntropy addresses Internet security, privacy, governance, performance, dependability, and inefficient resource consumption. The Syntropy Network's underpinning, Distributed Autonomous Routing Protocol (DARP), connects all nodes, PCs, and servers into a decentralized worldwide network with built-in encryption and smart routing.

On-Chain

Looking on-chain, ETH Mainnet transactions have reached their lowest point in 2.5 years while Layer 2 rollups like Optimism and Arbitrum have experienced massive growth and are now processing as many transactions as the Mainnet (@Dynamo_Patrick).

Elsewhere, Shark and Whale LTC address growth has been accelerating at an unprecedented rate, with the network hitting its highest number of addresses holding more 1,000+ LTC addresses in 2 years.

Crypto Derivatives

  • BTC and ETH funding rate remain positive
  • BTC 30-day ATM IV increased from 46% to 47% while ETH remained constant at 60%
  • 7-day 25-delta put skew eased for both BTC and ETH, going from -2% to -2.6% and -2% to -4%.

For futures, total liquidations came in at $37.71M, with the majority coming from longs at $29.04M.

IV increased slightly across the curve for both BTC and ETH. Term structure is still in contango, largely unchanged. The 7-day RV for BTC continues to fall, falling from 22.4% to 18.0%. Put/call ratio for BTC and ETH remains relatively unchanged at 0.51 and 0.23 respectively.

On the flow front, most of the volume comes from long-dated options. On the ETH side, the most predominant strategy is a straddle. Traders are likely expecting major price volatility in the upcoming months.

Lastly, the VIX fell lower and is now trading at 21.6.

Crypto Technical Analysis

Looking at TA, BTC lost ground as it broke below its $16.8K level that it established on the weekend. Prices trailed lower towards the $16.6K levels while the H4 RSI points lower to bearish conditions.

Looking at ETH, prices retreated as well from $1,232. However, ETH has been able to hold up better, trading above its range support of $1,196. On the H4, RSI is also trailing below the neutral level and looks to find further downside momentum in the near term.

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Yours sincerely,
Treehouse Research 🌳