Genesis Drops Funding Target & Warns Of Bankruptcy; Rise In Covid-19 Infections and Deaths Sparks Fears In The Markets

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• Markets waver as Covid-19 infections jumped and lockdowns intensified in China (more in Macro & TradFi)
• Binance decides against bailing out Genesis; Binance Labs leads upcoming investment in hardware wallet NGRAVE (more in DeFi & CeFi)
• On-chain BUSD activity indicate that investors may be fearful to buy crypto assets at current price levels (more in On-Chain)
• IV retreat while put skew eased; Term-structure remains backwardated ahead of Fed minutes (more in Crypto Derivatives)
• BTC and ETH tests their previous lows; Structure continues to create lower highs (more in Crypto Technical Analysis)

Macro & TradFi

GM! Oil prices edged marginally lower in a volatile session, plunging lower before rebounding after Saudi Arabia denied a report that OPEC+ would ramp up production. Elsewhere China’s daily Covid infections jumped to nearly the highest on record after the country eased lockdown measures. The new cases have also led to the first virus-related death for the first time in almost six months. Meanwhile, in the US, Cleveland Fed President Mester indicated that the Fed could shift its rate hikes lower, shifting its hikes by smaller increments.

Dow Jones fell 0.1%, S&P500 down 0.4% and the NASDAQ down 1%. 10Y US Treasury yields are up 10bps sitting at 3.819% while the 10-2 curve sits at its lowest this year at -0.65%.

DeFi & CeFi

• Binance declines to invest in Genesis Global Capital, citing potential conflict of interest
• Oracle network Pyth adds support for Aurora network via Wormhole
• Maker adds $rETH as new collateral type
• U.S. Patent and Trademark Office approve J.P. Morgan Chase’s crypto wallet trademark
• ConsenSys partners with mobile-focused blockchain Celo
• Binance Labs announced strategic investment in hardware wallet maker NGRAVE
• FTX Japan to allow withdrawals by year-end
• Grayscale Bitcoin Trust is reportedly protected from fallout of sibling company Genesis Global

Genesis Global Capital is struggling to raise new funds for its lending unit as the lender reportedly approached Binance and Apollo Global Management for capital injection. Binance, however, decided not to invest on the grounds of a potential conflict of interest. According to close sources, DCG is unwilling to sell parts of its venture portfolio and Grayscale. Genesis has also reduced its fundraising target from $1 billion to $500 million.

Mobile-first blockchain Celo has partnered up with Ethereum software firm Consensys to drive mainstream adoption of Web 3. The partnership will allow Celo to integrate with ConsenSys’ Infura infrastructure. Celo developers will be able to build with Infura and deploy Ethereum-based dApps built with Truffle. Furthermore, Celo will be part of ConsenSys’ Ethereum Scalability Partners with planned MetaMask compatibility and ConsenSys’ newly-announced Ethereum Climate Platform.

Elsewhere, Binance Labs will lead in an upcoming Series A investment in hardware wallet maker NGRAVE. NGRAVE aims to launch several products such as

• ZERO, a connectionless hardware wallet with EAL7 security certification
• LIQUID, a mobile app that provides real-time information
• GRAPHENE, an encrypted and recoverable key backup

On-Chain

For on-chain, exchange inflow volume for BUSD (7d MA) just reached a 7-month low of $2,593,821.88. This might indicate that despite the fact that prices of crypto assets have reached new lows, investors may still remain afraid to deposit BUSD, a stablecoin mainly used on Binance, to exchange for volatile crypto assets. They may also be anticipating a stronger downturn due to the possible collapse of Genesis.

Crypto Derivatives

• Funding rate remains negative on BTC and ETH
• 30-day IV rose slightly for BTC to 71.95% while it fell for ETH to 91.92%
• 30-day 25d put skew eased for both BTC and ETH to -18.93% and -22.22%, respectively

For futures, total liquidations came in at $160M, with the majority coming from long liquidations at $122M.

On the options front, BTC and ETH IV fell after reaching weekly highs on Monday. Put skew eased on both BTC and ETH. Term structure on the front end of the curve remains steeply backwardated, as near-term vol is bid up ahead of Fed minutes, in addition to the recent FTX Hacker dumping overhang.

Flows on BTC were mixed, with top structures including long risk reversal and bear put spreads. Traders are starting to bet on lower IV as a sizable amount of straddles were sold on both BTC and ETH in the past 24 hours.

Finally, the VIX spiked higher on Monday's market open but retreated throughout the day despite broader market indices closing lower.

Crypto Technical Analysis

BTC is at $15,780 and has sunk down by 3.06% over the last 24 hours. Price continued on its second day of red, reaching its previous daily low. On the H4, price sits at the bottom of the range once again for the 3rd time since 10th Nov. Although there is potential buying pressure at this support, price continues to form lower highs as it remains under its 50 period EMA and suggests that a potential break lower is on the table.

ETH is $1,107 and has also fallen by 3.06% yesterday. Similarly, a second bearish day has been seen since Saturday. On the H4, a close below this support indicates that it is likely to reach back down to its $1,000 level not seen since the 14th July. There are still no clear signs of bullish reversals on both pairs at the moment.

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Daily Readings

TradFi

• RBNZ set to deliver biggest rate hike ever as it eyes three month break

• German tax take rebounds in October -ministry report

• Spain to approve mortgage support for more than 1 mln households

• Fed's Mester says she supports smaller rate hike in December

• 'It's over': Twitter France's head quits amid layoffs

• Global stocks, oil prices slip as rising COVID cases prompt Chinese lockdowns

• IMF approves $88.3 mln for Malawi under 'food shock' loan window

• JP Morgan remains world's biggest systemically important bank

• Asia-Pacific markets mixed as investors weigh risks.

Crypto

• Market Wrap: Crypto Markets Nervous as the FTX Collapse Dents Institutional Confidence.

• Genesis Bankruptcy Jitters Send Bitcoin to Fresh Low.

• Crypto Market Analysis: Bitcoin and Ether Approaching Oversold Levels.

• FTX’s Collapse a Wake-Up Call for Venture Capitalists, Dragonfly Partner Says.

• FTX Exploiter Transfers $200M in Ether to 12 Crypto Wallets.

• Mobile-Focused Blockchain Celo Partners With Ethereum Software Firm ConsenSys.

• Crypto Exchange Uniswap Says It Collects Users' Public On-Chain Data.

• Cardano to launch new algorithmic stablecoin in 2023.

• BOE’s Cunliffe says regulation can save crypto from itself and it’s worth the effort.

• FTX Japan plans to resume withdrawals by 2023: Report.

• Grayscale's GBTC discount to NAV hits record low

Yours sincerely,
Treehouse Research 🌳

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