Gemini Investors File Class-Action Lawsuit On Gemini Earn Product; MicroStrategy Sold BTC To Offset Capital Gains

29 Dec 2022, Thursday

4:09 AM

Gemini Investors File Class-Action Lawsuit On Gemini Earn Product; MicroStrategy Sold BTC To Offset Capital Gains

BTC

ETH

S&P 500 Futures

$16,869.00

$1,225.25

$3,895.50

(+0.56%)

 (+0.85%)

(+1.43%)

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

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What We Are Covering Today

  • Chinese COVID cases tanked markets again (more in Macro & TradFi)
    Gemini investors file a lawsuit on Gemini co-founders, Winklevoss Twins; Galaxy Digital Buys Argo Blockchain’s Helios Mining Facility for $65 Million; (more in DeFi & CeFi)
    BTC whale transaction volume reaches 2-year low as BTC continues ranging (more in On-Chain)
    Variance risk premium widens as RV remains low while IV continues to rise (more in Crypto Derivatives)
    BTC nears its lower bound of tight trading range, bearish head and shoulder forming on ETH (more in Crypto Technical Analysis)

Macro & TradFi

Sweeping COVID infections in China are triggering entry restrictions on Chinese tourists among popular travel destinations. Italy announced the resumption of COVID testing on all passengers arriving from China after almost half of two flights landing in Milan tested positive; Japan also limited the airports where Chinese inbounders can land while the US initiated new testing requirements as well. Global assets sank on fear of new COVID variants. Meanwhile, JPY weakened against the greenback after notes from policy meetings earlier showed that raising the yield-curve-control target was more aimed at keeping stimulus rather than starting normalization.

Three major US indices sold off; NASDAQ closed 1.17% lower, SPX 1.2% and DOW around 1%. Tesla shares rebounded over 3% after a 7-day losing streak led the stock to refresh its worst year of performance on record; the firm has denied a halt of production at Shanghai factory, but sentiment remained capped on the electric car maker. US Treasury consolidated after 4-day widening in yield; 10-year benchmark yield traded 2bps tighter. Both oil benchmarks retreated.

DeFi & CeFi

  • MicroStrategy wash-traded BTC in a loss-harvesting tax maneuver
    Galaxy Digital Buys Argo Blockchain’s Helios Mining Facility for $65 Million
  • Gamma Strategies, an Ethereum protocol for active liquidity management on Uniswap V3, goes live on Arbitrum
  • Mean Finance, a Decentralized DCA protocol, launches on Ethereum
  • Gemini investors file a lawsuit on Gemini co-founders, Winklevoss Twins
  • Avalanche-based DEX Platypus launches $USP on the testnet
  • Mercurial will rename to Meteora and introduce a new token ($MET) to replace $MER
  • Layer2 scaling solution for Ethereum, Taiko launches its first public testnet
  • BNB Beacon Chain Testnet Hard Fork Upgrade on January 2nd and 12th,
    Introduces New Staking Mechanism
    BNB Chain-based DEX Thena announces launch on January 5.

Court records reveal investors are suing Gemini over its interest-earning crypto products. According to the complaint, investors filed a class-action lawsuit in the U.S. Southern District Court of New York requesting a jury trial. Gemini's Earn program, which provided up to 7.4% interest for lending crypto assets, didn't register such assets as securities under U.S. securities laws. Gemini unexpectedly terminated the program around Nov. 16 when crypto exchange FTX filed for bankruptcy and Genesis Trading, Gemini's borrower, had a liquidity difficulty. The filing stated that after the Gemini Earn program was halted, Genesis "refused to honor any further investor redemptions, effectively wiping out all investors who still had holdings in the program, including plaintiffs."

@BNBCHAIN announced a hard fork upgrade named Einstein for the Beacon Chain testnet at block height 34,587,202 and 34,963,303. Einstein is scheduled for January 2nd and 12th at 3:00 UTC. Testnet full node runners must upgrade to v0.10.4 by January 2. The update will bring the staking economy to Beacon Chain and offer permissionless validator elections. Anyone may stake $BNB to become a validator candidate or delegate it to trusted candidates.

Lastly, Ethereum Layer2 scaling solution, Taiko launched Snaefellsjökull, its first public testnet. Smart contracts may now be deployed on the testnet by developers. Participants may run Layer2 nodes. For now, users can't turn their nodes into provers, and the testnet can't create validity proofs. Testnet releases will fix this. Taiko, a ZK-Rollup, seeks EVM- and Ethereum-equivalence to support all Ethereum smart contracts, DApps, developer tools, and infrastructure.

On-Chain

Looking on-chain, whale interest in BTC has been declining as BTC whale transactions hit their lowest network levels since December 2020. Data from Santiment shows that BTC and BTC whale transactions have been historically correlated, and hence this data can be monitored for a spike in transaction volumes coupled with prices sliding, as would historically indicate the return of potential bullish sentiment.

Elsewhere, BTC’s realized market capitalization has plunged to its largest relative drawdown in history, which means that a majority of BTC holders are holding their coins at a loss.

Crypto Derivatives

  • BTC and ETH funding rate remain positive
  • BTC and ETH 30-day ATM IV increased from 47% to 50% and 60% to 61% respectively
  • 7-day 25-delta put skew eased for both BTC and ETH, going from -2.83% to 7.29% and -3.67% to -6.31% respectively

For futures, total liquidations came in at $78.34M, with the majority coming from longs at $66.23M.

With the celebration of Christmas and the advent of New Year holidays, the crypto market seemed to have been frozen as RV continues to fall. However, the continued increase in ATM IV means that the market does not expect RV to continue staying at such low-levels. Variance risk premium widens to 21% for BTC and 19% for ETH as IV continues to climb up while RV remains low. Term structure flattened for BTC as IV rose on the short-end and fell slightly on the long-end. Term structure is still in contango, largely unchanged. 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 popular strategy is the short call ladder. Traders seem to expect a spike in volatility or a major price movement to the upside.

Lastly, the VIX fell lower and is now trading at 22.14.

Crypto Technical Analysis

Onto TA, BTC extended its losing streak, falling by -1% to $16.5K. It has continued to trade between the $16.4K - $16.9K range for the past week. It is likely that the bulls and bears are staying on the sidelines during the holiday season. The daily RSI edged lower towards 40, favoring the bears. If price falls below the $16.45K level, we could see the next leg of downtrend toward the $16K level. However, if the bulls manages to hold their ground at the $16.45K support, we could see a rally toward the $17.8K-$18.4K range when volume returns.

As for ETH, its price dropped further by -1.8% to $1.19K after failing to break above its 20-d MA. If the downward momentum persists, price could likely sink toward the $1.14K-$1.16K support zone. Furthermore, a bearish head and shoulder pattern would materialize, which could spell further trouble for ETH. If price manages to bounce off at its current level, the bulls could look to test the next resistance level at $1.32K.

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Treehouse Research 🌳