Game-Changing Partnership Between Immutable and Polygon; Google Bard Finally Joins the AI Chatbot Race

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Our Daily View

What We Are Covering Today

• Russia-China tie deepens with Xi’s visit; Google releases Bard for public testing (more in Macro & TradFi)
• Mastercard and Stables team up to launch stablecoin digital wallet; Immutable and Polygon Labs partner to create zkEVM gaming network (more in DeFi & CeFi)
• Bitcoin transaction count hits ATH, likely fuelled by P2P and Ordinals (more in On-Chain)
• Volume remains muted as traders look to FOMC for direction; Variance risk premium returns to positive for BTC and ETH (more in Crypto Derivatives)
• Bullish momentum continues to slow with ETH being rejected at the resistance for the third time (more in Crypto Technical Analysis)

Macro & TradFi

Following two days of discussions with China's President Xi Jinping, Vladimir Putin promised to strengthen ties with Beijing and praised Xi's suggestions for resolving the conflict in Ukraine. Putin indicated that numerous aspects of the plan align with Russia's position and could potentially serve as the foundation for a solution. However, the US and its allies have rejected the Chinese initiative as biased toward Russia. In other developments, Ukraine has secured a $15.6 billion loan from the International Monetary Fund (IMF), marking the first time the institution has granted a loan to a country at war in its 77-year history

Meanwhile, to combat the immense competition from ChatGPT, Google is granting the public access to its AI service called “Bard”. While Bard won’t be integrated into its flagship search engine yet, Users in the US and UK can sign up for a waitlist and people will be added on a rolling basis, according to Sissie Hsiao, a vice-president in charge of Google Assistant. In addition, the company also promises to soon expand Bard’s availability to additional countries and non-English languages.

Lastly, major indices closed higher during the last trading session, with SPX, DJIA, and NASDAQ up by +1.29%, +0.98%, and +1.58%, respectively. Treasury yields have also increased with 2-year and 10-year Treasury yields currently at 4.119% and 3.587%, respectively.

DeFi & CeFi

• Animoca Brands and Hex Trust launch Gryfyn, NFT-centric custodial wallet joint venture
• MMO game developer CCP Games raises $40M for new blockchain game led by a16z
• Web 3 platform OP3N raises $28M in Series A at $100M valuation led by Animoca Brands
• Arbitrum announces DAO airdrop details, GMX and Treasure receive top amount of 8M $ARB while Uniswap and Sushi receive more than 4M token
• DWF Labs invests $20M in Synthetix in new partnership agreement
• Immutable partners with Polygon to launch Immutable zkEVM, a new zkEVM gaming network
• Mastercard announces collaboration with Australian stablecoin platform Stables to launch stablecoin digital wallet
• GameFi project Gala files $28M lawsuit against pNetwork
• Sony to incorporate NFTs into PlayStation games
• Florida Governor Ron DeSantis calls for ban on CBDCs

Immutable and Polygon Labs has formed a strategic alliance to develop a new network for Web3 gaming. The partnership will result in the creation of Immutable zkEVM, a new Ethereum scaling network that will utilize Polygon's zkEVM technology, which is set to launch in beta on March 27. The new chain aims to accelerate the development and adoption of Web3 gaming by enabling faster and cheaper transactions than Ethereum's mainnet. Developers can access early documentation to begin integrating with Immutable zkEVM, which will coexist with Immutable X. Immutable zkEVM is expected to roll out by the end of Q2 2023 and will use Immutable's IMX token for gas fees and transaction sequencing. The two firms also plan to develop cross-rollup liquidity between the networks.

Elsewhere, Mastercard and Australian stablecoin platform Stables have announced a collaboration to launch a stablecoin digital wallet in Q2 2023 in Australia. The wallet, which comes with a payment card supported by Mastercard, allows users to spend their USD Coin stablecoin anywhere Mastercard is accepted. The wallet will eventually expand to Europe, the United States, the United Kingdom, and most of the Asia-Pacific region. The payment solution deploys Stables' proprietary settlement engine that processes all payments using USD Coin and works directly with Mastercard to enable settlement. The wallet accepts deposits in a number of stablecoins, including Tether and Binance USD, but all deposits will be automatically converted into USDC at no cost.

On-Chain

For on-chain, despite BTC transaction count reaching its highest level since April 2021, the exchange deposits/withdrawals remain low without an uptick in transactions. The likely reason for the uptick in BTC transactions points towards the increase in P2P transactions and demand for Ordinals (@glassnode).

Meanwhile, Ethereum Layer-2 network Optimism fails to see any significant price appreciation despite a surge in new unique users since the start of the year. In fact, in the last month, while the rest of the crypto market recorded price upticks, OP posted a double-digit decline. After the peak in daily active addresses seen on 9 Feb, addresses involved in daily $OP transactions fell by over 95% (@Santiment).

Crypto Derivatives

• BTC and ETH funding rates continue their fall to 0.0004% and 0.0049% respectively
• 30-day ATM IVs increased to 66.77% and 65.18% for BTC and ETH respectively
• 30-day 25 delta call skew increased to 6.62% for BTC and 6.82% for ETH

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

For futures, total liquidations over the past 24 hours amount to $136.54M with about equal liquidations from shorts and longs.

On the options front, backwardation steepens as the near-term IV spikes as traders speculate on the Fed interest rate decision today. Variance risk premium flips positive for both BTC and ETH to 5.34% and 2.94% as IV was bid higher and RV began to fall. 7-day RV for BTC fell from 79.72% to 68.9%. Sentiment around BTC and ETH remains optimistic as the 30-day call skew increases as traders bid up IV for calls.

BTC flows seemed fairly muted ahead of the FOMC tomorrow. BTC contracts expiring 22 Mar and 23 Mar appeared to have a slight bias towards puts, however their volume remains low. The low volume might indicate uncertainty traders have towards the Fed interest rate decision as they remain on the fence in the short-term. However, far-dated options still have a significant skew towards calls.

Lastly, the VIX returned to its long-term average at 21.38.

Crypto Technical Analysis

On the TA front, the technical narrative for BTC stayed mostly the same as yesterday. The slowdown of the bullish momentum for BTC has begun to show on the larger timeframe with the price breaking the lower bound of the rising triangle which turned into a symmetrical triangle. Zooming into the 1H chart, a minor resistance is formed at $28.46K which will be key in determining the direction of BTC’s movement in the near future. RSI, on the other hand, has also further normalized at 61.4 at the 4H timeframe.

Meanwhile, throughout yesterday, ETH re-tested the upper trendline and was rejected by it for the third time. If price continues to drop, The next support zone is at $1.63K before going into the stronger$1.56K. RSI, on the other hand, has gained slightly due to the re-test and is currently at 56.4 and 62.8 respectively for 4H and 1D.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Read Past Issues

Daily Readings

TradFi

• EY's 'paused' split dragged into $2.7 bln London lawsuit

• ECB's Holzmann waters down call for three more rate hikes

• UBS mulls sweeteners to keep Credit Suisse wealth bankers - source

• Uncertainty reigns as Fed considers interest rate hike

• IMF approves nearly $3 bln bailout for Sri Lanka

• Canada's banking regulator reaffirms creditor hierarchy after Credit Suisse deal angers bondholders

• Credit Suisse AT1 bondholders consider possible legal action -law firm

• Biden uses first veto to defend rule on ESG investing

• German regulator allows SVB to conduct lending business through local branch

• First Republic shares tumble again as liquidity fears linger

• Bank stocks gain as markets digest Credit Suisse rescue

• Oil prices rebound after hitting lowest since 2021 on banking fears

• Goldman Sachs lowers euro zone growth forecast; sees no growth for UK

• Japan says banking system stable, plays down risk of contagion

• Xi and Putin hold talks on Ukraine, deeper ties between China and Russia.

• Amazon to lay off 9,000 more workers in addition to earlier cuts.

Crypto

• Render Network Eyes Solana Migration Ahead of Network Changes.

• Decentralized Exchange Camelot Crosses $100M in TVL Ahead of Arbitrum Airdrop.

• Core Scientific Bankruptcy Judge Approves Transfer of Over $20M of Equipment to Its Exclusive Energy Negotiator.

• Immutable and Polygon Labs Team Up to Expand the Web3 Gaming Ecosystem.

• Florida Gov. Ron DeSantis Proposes Law to Ban CBDCs.

• Origin Protocol Considers Subsidizing OGN Rewards After Joining NFT Royalty Wars.

• Crypto.com Moves Closer to an Operational License in Dubai.

• EU’s MiCA Crypto Law Debate Scheduled for April 18.

• FTX’s Bahamas Arm a ‘Nullity’ That Should Be Stripped of Assets: Court Filings.

• Crypto Fear and Greed Index hits highest level since Bitcoin’s all-time high.

• Mastercard to settle transactions for stablecoin wallet in APAC.

• Manta Network seeks to bring privacy to nonfungible crypto assets with new NPO platform.

• Coinbase pauses support for Signature Bank’s Signet: Report.

• GameFi project Gala files $28M lawsuit against pNetwork.

• Binance Will List Arbitrum ($ARB)

• BitMEX Launches Arbitrum Futures Contract

• NFT wash trading increases by 126% in February - Data

Deal Flow

• Two Sigma, Flow Traders and Laser Digital back crypto trading venue CrossX

• Animoca Brands and Hex Trust's joint wallet venture Gryfyn raises $7.5 million

• Market maker Auros raises fresh capital to repair finances hit by FTX collapse

• CCP Games secures $40M funding for upcoming Web3 game.

• Anonymous DAO tomi raises $40M for 'surveillance-free' internet.

• Web3 Platform OP3N Raises $28M in Series A Led by Animoca Brands

• Seed Club Ventures Emerges With $25M to Back DAOs.

• Synthetix Secures $20 Million Investment from DWF Labs in New Partnership

Yours sincerely,
Treehouse Research 🌳