Fed Raises Rates By 25bps, Hints at Pause On Hikes On Possible Credit Crunch; SEC Comes After Crypto Founders, CeFi And DeFi

23 Mar 2023, Thursday

4:03 AM

Fed Raises Rates By 25bps, Hints at Pause On Hikes On Possible Credit Crunch; SEC Comes After Crypto Founders, CeFi And DeFi



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

  • The Fed raises another 25 bps in interest rate (more in Macro & TradFi)
  • SEC sets its sights on Coinbase, Sushiswap and Justin Sun as they step up regulatory efforts on crypto (more in DeFi & CeFi)
  • BTC average daily fee hits 15-month high as Ordinals increase average block size (more in On-Chain)
  • Bullish sentiment might turn neutral as call skew falls significantly (more in Crypto Derivatives)
  • BTC dipped and bounces from its previous trendline while ETH breaks its previous support (more in Crypto Technical Analysis)

Macro & TradFi

As per yesterday's FOMC meeting, the Federal Reserve has decided to raise interest rates by another 25 bps, despite its responsibility for both the financial system and macroeconomy, in an effort to slow down economic growth and bring down inflation. While the Fed has tried to maintain the separation of roles, higher interest rates can affect financial institutions and potentially lead to bank failures or a credit crunch, which may have unintended consequences on the economy. The Fed recognized that bank instability could result in tightening credit conditions, which it hopes will substitute for rate hikes. However, there are concerns that the Fed may have overreacted and made the financial system more fragile. The outcome of this decision will be judged based on whether the instability in the financial system is contained and whether inflation falls back to 2%.

Following the interest rate hike, stock market indices in the United States have all closed lower during the last trading session, with the SPX, DJIA, and NASDAQ down by -1.65%, -1.63%, and -1.61%, respectively. Treasury yields have also decreased, with the 2-year and 10-year Treasury yields currently at 3.967% and 3.472% respectively.

DeFi & CeFi

  • FTX bankruptcy estate to clawback $460M from Modulo Capital
  • SEC targets CeFi and DeFi players - serving a Wells Notice to Coinbase and subpoena to Sushiswap
  • SEC charges Justin Sun for fraud and sale of unregistered securities while suing eight other celebrities in promoting in $TRX
  • Telegram users can now send USDT through chats
  • Metamask Institutional introduces $ETH staking marketplace
  • zkSync ecosystem in focus as crypto user hunt for next airdrop after Arbitrum
  • $XRP token surges on positive developments in Ripple vs SEC case
  • 1inch proposes no platform fee NFT marketplace aggregator with Solidity.io
  • Chainflip Labs announces $FLIP airdrop schedule and tokenomics
  • Seed Club Ventures launches $25M fund to invest in DAOs development
  • Tomi raises $40M in funding round led by DWF Labs
  • Turnkey closes $7.5M seed round led by Sequoia Capital with participation from Variant and Coinbase Ventures

Firstly, the US Securities and Exchange Commission (SEC) has charged Justin Sun, the founder of Tron, and three of his firms, Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent), for the unregistered offer and sale of crypto asset securities $TRX and $BTT, as well as for fraudulently manipulating the secondary market for $TRX through wash trading. Sun is also accused of paying celebrities, including Lindsay Lohan and Jake Paul, to promote $TRX and $BTT without disclosing they were paid to do so. The SEC has also charged those eight celebrities, with six settling for a total of over $400,000 in disgorgement, interest, and penalties. Sun allegedly directed his employees to engage in more than 600,000 wash trades of $TRX between two crypto asset trading platform accounts he controlled, with between 4.5 million and 7.4 million $TRX wash traded daily. The SEC claims that Sun and his companies generated millions in illegal proceeds at the expense of investors.

Not stopping there, the US Securities and Exchange Commission (SEC) plans to take enforcement action against cryptocurrency exchange Coinbase. The regulator has issued a Wells notice to the firm indicating it believes investor-protection laws may have been breached. The notice covered several aspects of Coinbase's business, including its staking service Coinbase Earn, digital assets listed on its exchange and crypto wallet service. The SEC's claims that Coinbase listed assets that should have been regulated as securities could form part of the wider investigation of the company, experts say. Coinbase CEO Brian Armstrong claims the SEC has not been fair, reasonable or demonstrated seriousness of purpose when it comes to engaging with digital assets. The news caused Coinbase's shares to drop by over 13% after hours. Many have expressed solidarity with Coinbase while the crypto community is questioning the SEC's sudden action after signing off on the firm public listing.

Additionally, SushiSwap has received a subpoena from the SEC, requesting documents and information about the team's operations. This could lead to regulatory action against the DAO. In response, SushiSwap has established a legal defense fund of $3 million to cover legal costs.

The SEC is on-fire.


The average daily fees paid for BTC transactions have reached a 15-month high of $37,519. This increase in fees could be attributed to the increase in transaction volume and the recent increase in BTC price could have also led to the increase in daily fees.

In addition to these factors, the increasing popularity of Ordinals may also be contributing to the rise in fees. Ordinals allow users to add data to a Satoshi, and since their launch, over 570,000 Ordinals have been inscripted with fees totaling over $3 million. However, this non-transaction data takes up block space, which means that there is now more competition for block space between Ordinals and regular transactions. This competition is driving up fees even further, as users are willing to pay higher fees to ensure that their transactions are confirmed quickly (@glassnode).

Crypto Derivatives

  • BTC and ETH funding rates remain low
  • 30-day ATM IVs decreased to 59.86% and 59.08% for BTC and ETH respectively
  • 30-day 25 delta call skew decreased to 2.91% for BTC and 1.36% for ETH

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

For futures, total liquidations over the past 24 hours amount to $246.07M with the majority coming from longs at $183.72M.

On the options front, the backwardation eases as implied volatility (IV) falls across the curve after the Fed's interest rate decision. The variance risk premium (VRP) flips negative as a result of the sharp decline in IV, with VRP sitting at -8.34% for BTC and -5.17% for ETH. The call skew tightens significantly, with the 30-day call skew for BTC falling from 6.62% to 2.91% and the 30-day call skew for ETH falling from 6.82% to 1.36%. From the perspective of skewness, traders are maintaining a neutral to bullish attitude.

On the flow side, the largest volume comes from BTC's end-of-week 24 Mar contract, likely due to delta-over-volatility (DOV). Pre-FOMC, there were mixed flows with both profit-taking and topside buying. Notable profit-taking occurred for ETH with 8.5K contracts of 31 Mar 1.9K calls and 7K contracts of 31 Mar 2K calls options being sold. Topside buying occurred for BTC with 837 contracts of 26 May 32K/36K call spread being bought. Another notable trade occurred on CME with 2K contracts of BTC June 40K/50K/55K call fly being bought (@tradeparadigm).

Lastly, the VIX increased marginally to 22.26.

Crypto Technical Analysis

On the TA front, BTC has reacted similarly to the traditional equities market. Price has breached the lower bound of the triangle and rebounded from the previous trendline. The price movement in the next few hours might determine the short-term direction. If price successfully rebounds, BTC will re-test the resistance at $28.5K while the support sits at 23.7K if it falls below the trendline, indicating an 11% downside. RSI, on the other hand, has fallen significantly and is currently at 48.6 at the 4H timeframe.

Meanwhile, ETH has also fallen below the resistance zone and failed to qualify for the rebound. Post the Fed’s announcement, ETH price has been slowly climbing back up and is aiming for the $1.77K resistance zone. If it fails to break the resistance, the right shoulder of the head-and-shoulder pattern would be formed and a reversal could be in sight which could test the lower support at $1.64K. RSI has dipped further and is currently at 45.7 and 56.9 respectively for 4H and 1D.

Access institutional-grade commentary on TradFi × Crypto markets

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