Dogecoin Is Now The Face of Twitter, Literally; Oil Prices Surge, Though Further Increases Remain Challenging

04 Apr 2023, Tuesday

3:38 AM

Dogecoin Is Now The Face of Twitter, Literally; Oil Prices Surge, Though Further Increases Remain Challenging

BTC

ETH

S&P Futures 500

$27,754.75

$1,805.00

$4,151.50

(-1.41%)

 (+0.65%)

(+0.53%)

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

GM Treehouser 🌳

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March 2023 Market Recap

Our Daily View

What We Are Covering Today

  • Crude oil prices see the highest one-day gain in over a year due to Saudi Arabia’s announcement of the supply cut (more in Macro & TradFi)
  • Twitter changes its blue bird logo to Dogecoin icon; Dune introduces AI-powered natural language querying (more in DeFi & CeFi)
  • Stablecoins hit by regulatory pressures; Bitcoin MVRV suggests recovery phase (more in On-Chain)
  • Volume diverges with BTC in favor of puts and ETH in favor of calls (more in Crypto Derivatives)
  • Fakeout observes on both BTC and ETH with further confirmations needed to determine future price outlook (more in Crypto Technical Analysis)

Macro & TradFi

Oil prices surged 6.3% on Monday, marking the steepest one-day increase in over a year, following a production cut led by Saudi Arabia and other members of the OPEC+ cartel. However, further price increases face a plethora of challenges, including the possible US recession. While the rise in crude prices adds complications for central bankers balancing the need to tackle inflation and worries about the banking system, benchmark oil prices remain lower than they were a month ago. To move crude prices even higher, several moving parts must align, including whether producers follow through on cuts, supply from midsize producers, demand from China, and the recent banking upheaval.

On the other hand, Tesla's stock dropped over 6% as investors expressed concern about the company's sales and production numbers, as well as the potential for more price cuts. The electric-vehicle maker's first-quarter deliveries were below the analyst consensus. The sales and production numbers for the Model X and Model S suggest that more price cuts may be necessary to stimulate demand. Investors are also watching whether price cuts for the Model 3/Y can maintain the demand levels seen in Q1'23. While some analysts view Tesla's guidance as mixed, others remain optimistic about the company's prospects. Tesla's stock has lost 46% in the past 12 months but has outperformed the S&P 500 index in the past three months, up 80%.

Lastly, during the last US trading session, the S&P 500 was up by 0.36% and the DJIA was up by 0.98%. However, the NASDAQ closed lower, with a 0.27% loss. The yields on 2-year and 10-year Treasuries dropped slightly, with the former currently sitting at 3.986% and the latter at 3.428%.

DeFi & CeFi

  • Dogecoin soars after Twitter changes its logo from blue bird to doge
    Euler Finance gets back all recoverable funds stolen from hackers after negotiation efforts
  • New dYdX chain promises decentralized validators, no censorship, native $USDC issuance and no admin access for DAO funds, according to founder
  • Some MEV bots targeted by hackers, causing losses of over $20M
  • Dune launches AI features to simplify data queries, bring natural language querying
  • Bybit to establish its core Asian operations in Hong Kong
  • Yuga Labs partners with Gucci to announce Otherside-themed jewelry
  • FIFA launches AI-powered mobile soccer game, with plans to add NFTs
  • Alchemy Pay receives $10M in funding from DWF Labs
  • Cross-chain aggregator Li.Fi raises $17.5M in a Series A fundraise co-led by CoinFund and Superscrypt
  • MM.Finance closes its launchpad public offering on Arbitrum chain with a 364x oversubscription, with total commitment value at $182M

Dogecoin, the meme cryptocurrency favored by Elon Musk, saw a surge in price of over 35% after Twitter replaced its traditional blue bird logo with the iconic Shiba Inu dog of Dogecoin. Prior to this, the price of DOGE had not surpassed 10 cents since December. This move was speculated to be a nod towards the joke cryptocurrency, with Musk having previously suggested that DOGE may offer better payment functionality than bitcoin. Soon after the logo change, Musk tweeted out a cartoon image. The change in logo also comes after Musk asked a judge to dismiss a $258 billion racketeering lawsuit accusing him of running a pyramid scheme to support DOGE. While it is unclear whether the change in Twitter's logo is permanent, DOGE saw an increase in price by over 18% in the past 24 hours.

Elsewhere, Dune, a blockchain data analytical tool, has introduced a new feature called Query Explanations that uses Large Language Model (LLM) AI to provide natural language explanations of complex SQL queries. This is just the first of a suite of LLM features that the Dune Wizards community is planning to offer its users, including query translations, natural language querying, search, and a wizard knowledge base. The purpose of these features is to make data analysis more user-friendly, particularly for beginners who may struggle with complex queries. The upcoming natural language querying feature will allow users to ask questions and query Dune's datasets in plain English, without needing to know SQL.

Lastly, some MEV bots on Ethereum have been attacked resulting in nearly $20M in losses. According to Twitter user 3155.eth, the hacker who caused the attack had become a validator 18 days ago and prepared the tokens 16 days ago, indicating that it may have been a well-planned attack. The attackers replaced some of the MEV bots' trading modules, making sandwich arbitrage impossible. Blockchain auditor OtterSec reported that a validator forced a series of transactions into one Ethereum block to steal funds from a major Ethereum MEV bot. MEV flashbots use "sandwich attacks" to steal value from users by manipulating the underlying price of assets.

On-Chain

Looking at on-chain data, stablecoins have seen a decline in market capitalization over the past year. USDT dominates 63.7% of stablecoin capital while USDC and BUSD have seen net redemptions and a decline in supply, respectively. Pressure from US regulators has led to uncertainty surrounding bank and exchange solvency, resulting in the largest net outflow of stablecoins from Binance at -$295M/day (@glassnode).

Meanwhile, the MVRV of BTC is trading at 1.4 as it deviate from its all-time-mean value of 1.8. MVRV deviations can indicate different phases in the market: depression (MVRV < Low Band), recovery (Low Band < MVRV < Mid-Range), excitement (Mid-Range < MVRV < High Band) and euphoria (High Band < MVRV). Currently, the market is in recovery based on its MVRV reading. The all-time-average MVRV of 1.8 implies a price of around $36.1k, which has historically motivated heavy profit-taking resulting in a strong psychological level to overcome (@glassnode).

Crypto Derivatives

  • BTC funding rate flips negative while ETH funding rate flips positive
  • 30-day ATM IVs increased to 57.95% and 60.07% for BTC and ETH respectively
  • 30-day 25 delta call skew for BTC decreased to 1.38% while ETH put skew eased to -0.38%

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On

28.14%

BNB

OKX

BINANCE

12.80%

ETH

OKX

DYDX

10.32%

DOGE

OKX

BYBIT

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 experienced total liquidations worth $178.85M in the past 24 hours, with longs accounting for the majority at $112.97M.

In the options market, the BTC term structure remains in contango, while ETH remains flat. BTC short to mid-term skews were easing, while the long term (180-day) remained constant. The 7-day RV has stabilized and is fluctuating around 45% for both BTC and ETH. Put-call open interest climbed from 0.46 to 0.50 for BTC.

On the flow side, the BTC put-call volume ratio climbed as high as 1.73 in the past 24 hours, indicating strong bearish sentiments. On the other hand, ETH tells a different story, with a high volume of call options being traded for 28 Apr, while for BTC, significantly more puts were traded for the same date.

Some significant ETH trades included the topside closing with 10.5K contracts of 28 Apr 2.2K calls, and a topside buying with 10K contracts of 28 Apr 2.2K/2.3K call spread.

Noteworthy trades for BTC include downside protection with 650 contracts of 28 Apr 27K/25K/23K put fly being bought and 483.5 contracts of 14 Apr 26K/27K put spread being bought.

Finally, the VIX continues to fall and currently sits at 18.55.

Crypto Technical Analysis

On the TA front, BTC continues to respect the historical trendline with price hitting it for the third time since last Friday. While it briefly crossed over the trendline last night on the hourly timeframe, the market has quickly corrected itself and has proven to be a fakeout. Further confirmation is needed to ensure the breakout is below the trendline. If the breakout confirms, the narrative remains the same as in previous days and BTC could test the local support zone around $26.9K. If it bounced back, however, price will likely test the resistance at $28.4K.

Turning to ETH, the parallel channel continues to be respected. Another fakeout was observed last night as price surged above the upper bound at the $1.83K resistance. In addition, yesterday’s movement proved this range of $1.81K - $1.83K to be a strong resistance which acts as a key to determining the future potential of ETH price. As price pulls back, ETH could test the new resistance observed at the 1H timeframe at around $1.77K before going into the 4H support at $1.72K.

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