G7 Imposes Further Sanctions on Russia; Ripple Initiated Its New Platform for CBDCs

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Our Daily View

What We Are Covering Today

• G7 decides to impose further sanctions on Russian entities; Alibaba plans to IPO its grocery and logistics arm (more in Macro & TradFi)
• Digital currency pioneers Ripple and Coinbase mark new milestones in blockchain adoption and market expansion respectively (more in DeFi & CeFi)
• Ethereum Genesis Era whale emerges; Litecoin activity propelled by Ordinal mania (more in On-Chain)
• IV continues to fall for ETH and BTC; ETH options reflect bullish bias for upcoming month (more in Crypto Derivatives)
• BTC and ETH display resilience as they break below key support levels but find acceptance within its range (more in Crypto Technical Analysis)

Macro & TradFi

During the Group of Seven (G7) summit in Hiroshima, the leaders will take steps to increase pressure on Russia with additional sanctions on goods used on the battlefield. The Biden administration will blacklist around 70 entities and target approximately 300 entities, vessels, and aircraft that have facilitated the war in Ukraine. They will also aim to disrupt Russia's ability to acquire resources for the conflict and close loopholes that allow sanctions evasion. The G7 nations will commit to immobilizing Russia's sovereign assets until the war is resolved and work towards reducing reliance on Russian energy. In addition, the G7 will agree to track Russian diamonds but will not impose a complete ban on the trade. However, this decision could potentially lead to an import ban in the future.

To kick off the much-anticipated breakup of the business, Alibaba Group is planning to explore initial public offerings (IPOs) for its logistics (Cainiao) and grocery arms (Freshippo) while separating its $12 billion cloud business as part of a larger restructuring effort aimed at revitalizing revenue growth. The move is intended to simplify the company's structure and respond to market needs. Alibaba's recent lackluster revenue growth, coupled with concerns about the pace of China's recovery, has prompted the restructuring. The company aims to make its different operations more agile and raise external financing for its international commerce division.

Lastly, the market on Thursday closed as the fourth winning streak for most major US equity indices. The S&P 500, DJIA, and NASDAQ saw increases of 0.94%, 0.34%, and 1.50% respectively, mostly driven by the growing confidence that the White House will reach a deal with the Congress on debt ceilings. Meanwhile, earnings season continues with Walmart reporting better-than-expected results leading to a 1.3% gain on the retail giant. However, the guidance that Walmart provided hinted at the worrying insights of weakening discretionary spending of American consumers.

DeFi & CeFi

• Ripple Starts Platform for Central Banks to Issue Their CBDCs
• Coinbase opens subscription service for zero fees transactions
• FTX sues SBF and other former executives over acquisitions
• Westpac Bank will block payments to crypto exchanges it deems as "high-risk"
• U.S. Lawmakers do not see eye-to-eye for stablecoin policies
• Bitcoin mining rig maker MicroBT unveils most powerful machine yet
• Apecoin DAO receives approval to boost BAYC, $APE Ecosystem Growth

Ripple has initiated a platform which is designed to empower central banks, governments, and financial institutions to issue and manage their own Central Bank Digital Currencies (CBDCs). The platform, built on an advanced version of Ripple's Private Ledger that was initially developed in 2021 for CBDC issuance, allows these institutions to oversee the entire life cycle of a CBDC. This lifecycle management includes minting, distribution, redemption, and token burning. Additionally, financial institutions can utilize the CBDC platform to manage and engage in inter-institutional settlement and distribution functions.  A unique feature of this platform is that it supports both wholesale and retail CBDCs, with the capability to enable offline transactions. This versatility can potentially increase the attractiveness and utility of CBDCs for a broader set of use cases.

Coinbase, on the other hand, has officially launched its zero-fee subscription service called 'Coinbase One'. Initially available in beta testing since 2021, the service has now expanded from the U.S. to include other significant markets such as the U.K., Germany, and Ireland.  For a monthly fee of $29.99, subscribers can enjoy commission-free trading and enhanced staking rewards. This move is anticipated to offer customers a unique value proposition by reducing their overall transaction costs and providing opportunities for additional passive income. Coinbase One is designed to offer additional benefits to its U.S. customers, such as pre-filed tax return documents. Moreover, it will provide access to Messari insights and analytics through a "Pro" account and a complimentary six-month trial for personal crypto portfolio analytics from CoinTracker.  Ultimately, Coinbase's strategic expansion of its service portfolio is expected to strengthen its position in the global crypto exchange market.

ApeCoin DAO has approved a proposal to launch an accelerator program. The initiative, titled AIP-209, was submitted and greenlit through ApeCoin DAO's Idea Proposal system. It seeks to incubate and launch projects that the community approves, focusing on enhancing the value of the Bored Ape Yacht Club (BAYC) NFT collection, and other initiatives that utilize ApeCoin.  The "Ape Accelerator'' looks to involve the ApeCoin community in various capacities. Individuals can play the role of initiators by submitting project proposals, while others can function as voters by employing their APE tokens to vote on whether proposed projects should be initiated. Furthermore, participants will have the opportunity to support sanctioned projects through the purchase of NFTs and other unspecified tokens. Project launches facilitated by the Accelerator will employ apecoin, potentially generating value for these tokens by creating revenue and returns for holders. This development reflects a strategic move to reinforce the utility and value proposition of ApeCoin, which was initially issued as a governance token by Yuga Labs to BAYC NFT collection holders.

On-Chain

After more than 2 years of inactivity, a large early investor in Ethereum, who took part in Ethereum's initial coin offering, staked 4,032 ETH (appx. $7.5M), according to data provided by @lookonchain. This investor, who belongs to Ethereum's Genesis era, received about 60K ETH during the ICO.  It remains to be seen whether this activity will become a larger trend among the early ICO participants or an isolated event.

Although the broader market is experiencing some declines, Litecoin rallied about 15% from $80 to $92 at this time. At one point, it reached a one-month high of $95 on Wednesday. According to Coindesk, apart from the inflow of money into the Litecoin futures market, recent congestion on the Bitcoin network (due to the surge in BRC-20 tokens) could have diverted users to the Litecoin network. Increased activity on the network is evidenced by active addresses peaking over 900K and daily confirmed transactions also reaching a record high of nearly 600K last week. As per Decrypt, the Litecoin Foundation conveyed to them that the increased enthusiasm in LTC can be associated with the ongoing Ordinal mania, as over 2.6M Litecoin Ordinals have been inscribed on the blockchain so far.

Crypto Derivatives

• BTC and ETH funding remained slightly positive.
• 30-day ATM IV falls for the third consecutive day to 42.74% and 43.36% for BTC and ETH respectively.
• Deribit Implied Volatility Index (DVOL) is 46.31% and 47.06% for BTC and ETH respectively.
• 30-day 25-delta skew for BTC and ETH is 3.14% and 5.98% respectively.

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

The futures market saw $87.12M in liquidation over the 24 hours with 73.5% coming from longs at $64.03M.

The term structure for options remains in contango as implied volatility (IV) has remained relatively stable amidst macroeconomic events surrounding the debt ceiling debate. IV for BTC and ETH has decreased alongside the VIX for S&P 500, reflecting the overall optimistic macro sentiment and positive stock market performance. Additionally, realized volatility (RV) has fallen below the implied volatility at the at-the-money (ATM) level for the third consecutive day, indicating that the crypto market is experiencing less risk than previously expected. This sustained premium suggests that traders continue to hedge against potential downside risks or seek protection.

The 25-delta skew for BTC and ETH options with a 7-day maturity has remained neutral, indicating that market participants do not currently have a strong directional bias for the upcoming week. The 25-delta skew measures the relative pricing of call and put options. An increase in skew suggests higher put option prices compared to call option prices, while a decrease indicates higher call option premiums relative to put premiums.

In the last 24 hours, the top traded strategies for BTC have been the short straddle, reverse put calendar, and short put butterfly, all involving selling of options. These strategies reflect traders' expectations of sideways movement in the crypto markets, and they may be capitalizing on the increased Volatility Risk Premiums (VRP) while betting on a continued decline in IV.

On the other hand, significant trading volume has been observed in bullish ETH strategies, specifically bull diagonal spreads (puts) and bull call spreads, over the past 24 hours. Notably, there has been considerable volume in the 26 May 23 ETH call options, with significant open interest between $1.8K to $2.4k OTM strike prices. This suggests bullish sentiment and positioning for upward price movements in ETH over the next month.

Lastly, VIX for S&P 500 fell 4.86% to 16.05.

Crypto Technical Analysis

Shifting our focus to technical analysis, BTC encountered another failure to find acceptance above the ascending trendline, despite briefly surpassing it on Thursday. Looking at the 4-hourly chart, we observe that BTC not only dropped below the $27K support level but also dipped below the lows established on Monday, before experiencing a slight recovery above that level. This indicates a robust support level. Throughout the week, BTC has remained within a range bound by the highs and lows of Monday, showing no significant progress in breaking out of this consolidation zone. A breakthrough beyond this zone has the potential to generate further momentum in the corresponding direction.

Meanwhile, ETH experienced a dip below its $1.8K support level but quickly recovered above it. Just like BTC, ETH has been consistently examining its support level and successfully maintaining its strength above it. For ETH to experience a bullish scenario, it needs to initially surpass the descending trendline on the hourly chart. This breakthrough is essential to create a significant upward momentum towards the descending trendline on the daily chart, which has acted as a prominent resistance zone for ETH over the past few months. Additionally, ETH must sustain its $1.8K support level, as a breach could result in further downward movement.

Access institutional-grade commentary on TradFi × Crypto markets

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Daily Readings

TradFi

• Nvidia, AMD, Micron lead chip sector higher with AI, Japan in focus

• U.S., Taiwan reach deal on first part of '21st Century' trade pact

• Growing debt ceiling deal hopes send stocks higher

• US exchanges to bust erroneous CDW Corp trades after shares briefly dive 96%

• Alibaba misses revenue estimate, approves cloud unit spinoff

• Sen. Warren seeks details on 'troubling' sale of First Republic to JPMorgan

• Berkshire Hathaway boosts stake in Occidental Petroleum to 24.4%

• Argentina president, protesters slam IMF debt, austerity as economy creaks

• Yellen reaffirms strength of US banking system in meeting with bank CEOs

• Bank of Canada's Macklem says inflation coming down despite April gain

• PacWest, Western Alliance help regional bank stocks notch gains

• US weekly jobless claims fall; labor market defying recession fears

• ADB warns China it risks wasting money on state-led growth

• China's fiscal revenue growth quickens as economy recovers

• Outperforming fund manager is bullish on these cybersecurity stocks, citing more room for growth.

• As G-7 Summit kicks off in Hiroshima, China and Russia are on everyone’s minds.

Crypto

• Bitcoin Mining Rig Maker MicroBT Unveils Most Powerful Machine Yet.

• Coin Cafe Ordered By New York AG to Pay Back $4.3M in Fraudulent Fees.

• Coinbase Officially Opens Subscription Service; Expands Reach Outside U.S..

• Crypto Markets Turn Lower After Jobs Data, Hawkish Fed Comments.

• Pakistan Announces Fresh Ban on Crypto, but Adoption as a Hedge Remains Popular.

• Galaxy Executed Its First OTC Options Trade as Demand for On-Chain Options Ramps Up.

• NFT Trading Volume on Track to Drop Below $1B, But Does That Metric Matter?.

• Coinbase Cloud Joins Chainlink as Node Operator to Bolster Security.

• Ledger Continues to Defend Recovery System, Says It's Always 'Technically' Possible to Extract Users' Keys.

• ApeCoin DAO Approves Proposal to Boost Bored Ape NFTs, APE Ecosystem Growth.

• G-7 Must Take Charge in Ending 'Lawless' Crypto Space, FATF Chief Says.

• FTX Units Sue Embed Shareholders, Seek to Retrieve $6.9M.

• Lido Community Members Propose LDO Token Staking and Buyback Plan.

• Singaporean family office to set up digital bank in Bahrain.

• Former CFO indicted for diverting $35M to cryptocurrency venture.

• Metaverse ETF ‘PUNK’ closing after betting against Meta’s vision.

• Ripple to demonstrate tokenization in HKMA e-HKD pilot program using new CBDC platform.

Deal Flow

• ZK Startup Lagrange Labs Raises $4M to Build Secure DeFi Interoperability.

• Blockchain developers launch $50M fund to increase Wormhole adoption.

• Borderless Capital Leads Wormhole-Powered $50M Cross-Chain Fund.

Yours sincerely,
Treehouse Research 🌳