🌳Geopolitical Tensions Escalate Amid US-Israel-Hamas Dynamics; FTX Estate's Significant $SOL Staking Influences Market Dynamics

GM Treehouser 🌳

Welcome to our Treehouse Daily newsletter, where Treehouse brings you financial news and insights free daily! We believe you’ll find this helpful.

Also, in case you have missed it, check out our latest research piece 👇

Our Daily View

What We Are Covering Today

• US and its allies intensify prevention of Israel-Hamas conflict; New US regulations incoming on China’s access to cutting-edge technology (More in Macro & TradFi)
• FTX estate stakes 5.5M Solana coins; KYC hook for Uniswap v4 stirs community controversy (More in DeFi & CeFi)
• Number of BTC whale addresses saw the highest 1-day increase since early 2022; Tomo, a friend.tech imitator, became one of the biggest protocols on Linea (More in On-Chain)
• BTC and ETH both break descending channels; differing RSI values hint at varied momentum (More in Crypto Derivatives)
• Downward parallel channels observed with both BTC and ETH while the technical indicators of ETH show a grimmer future (More in Crypto Technical Analysis)

Macro & TradFi

The geopolitical landscape is tensing up as the US and its allies intensify efforts to prevent the Israel-Hamas conflict from spreading across the broader Middle East. Amid concerns that a potential Israeli invasion of Gaza could draw Iran into the fray, White House National Security Advisor Jake Sullivan has issued stern warnings to Tehran. Meanwhile, Israel readies itself for a significant ground assault, mobilizing a vast number of reservists. US Secretary of State Antony Blinken, in his Middle East tour, is seeking regional support to contain the fallout, reflecting the international community's shared apprehension.

In other news, the Biden administration is also intensifying its efforts to curb China's technological advancements, particularly in the semiconductor and chipmaking sectors. In a bid to limit China's access to cutting-edge technology with potential military applications, new regulations will be introduced this week. These will add Chinese chip design firms to a trade restriction list and enforce stricter controls on the sale of advanced chipmaking equipment to Chinese entities. Notably, these measures come as a response to concerns about China developing a significant military edge and following last year's significant curbs. U.S. tech giants, including Nvidia, have already faced substantial losses due to past restrictions. As the U.S. takes these steps, there is growing apprehension among investors about potential revenue implications for American companies, given China's dominant position in the semiconductor, PC, and smartphone markets.

US equities predominantly saw a dip on Friday as the S&P 500 and NASDAQ Composite registered declines of 0.50% and 1.23%, with DJIA maintaining a 0.12% gain. With the prospect of a ground offensive in Gaza looming large, the markets are cautiously moving as traders seek safety in their investments. In Asia, South Korea's Kospi dipped 0.59%, Hong Kong's Hang Seng stood neutral at 0.00%, and China's CSI 300 dropped 1.05%. Going forward, market participants will pay close attention to the US Retail Sales data, set to be released this Tuesday at 20:30 SGT.

DeFi & CeFi

• FTX stakes 5.5M Solana
• KYC hook for Uniswap v4 stirs community controversy
• South Korean exchange Upbit gets initial license nod from Singapore
• ProShares prepares to launch unique Short Ether Strategy ETF
• Apple briefly pulls MetaMask from App Store
• SEC reportedly won’t appeal court decision on Grayscale Bitcoin ETF
• Account Labs Raises $7.7M and Launches UniPass, a Google-enabled Crypto Wallet

The FTX estate, acting as part of bankruptcy proceedings, recently staked over 5.5M $SOL worth $122M. The $SOL tokens were sent to Figment, a staking validator firm for institutional investors. This is in line with FTX's early investment in Solana, which has seen the exchange regularly receiving a significant volume of $SOL according to a vesting schedule. The FTX estate has the option to liquidate these holdings but is primarily focused on recovering assets for the exchange's creditors. This move follows a U.S. court's approval of the sale of $1.3B in $SOL from FTX in weekly batches. The decision temporarily lowered $SOL's price to a two-month low.

In other news, a controversial new hook available for Uniswap v4 has stirred debate in the crypto community. Simply speaking, hooks are tools that enable developers to customize code without altering the program's main structure. This hook, in particular, allows users to undergo Know Your Customer (KYC) checks before engaging in a trade. Critics argue that this could pave the way for DeFi protocols to be whitelisted by regulators, potentially leading to off-chain databases and restrictions on non-KYC transactions. In Uniswap v4, this hook allows for KYC verification within the DeFi protocol. Some believe this feature may be beneficial for projects operating within regulatory confines, while others express concerns about overregulation. Uniswap v4 is set to introduce customizable hooks in early 2024, with access limited to governance-approved entities.

On-Chain

According to the data from @santimentfeed, BTC whale wallets, categorized by addresses holding 100-1K BTC, increased by 16 over the weekend, marking the most significant one-day surge since February 28, 2022. These likely represent long-term investors seeking to leverage recent price declines to "dollar-cost-average" their positions, painting a bullish long-term outlook for the token.

Elsewhere, according to data provided by @sentio, Tomo, a SocialFi dApp on Linea similar to friend.tech, has seen substantial growth in recent days. With 2.82K unique transaction addresses and 994 ETH in Total Value Locked (TVL), Tomo now ranks as the 6th largest protocol by TVL and holds one of the largest ETH balances on the Linea chain. Similar to other friend.tech imitators like post.tech on Arbitrum and Stars Arena on Avalanche, there have been several comparable protocols in the market, though none have reached the scale of the original, raising questions about the long-term sustainability of these imitator protocols.

Crypto Derivatives

• Funding rates remain positive for both BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH remained relatively unchanged at 37.49% and 36.79%, respectively.
• 30-day 25-delta skew (C-P) for BTC and ETH persisted at -1.36% and -4.18%, respectively.
• The futures market witnessed $54.48M worth of liquidations, with shorts representing 83.79% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

In the recent 24-hour analysis, BTC's IV (Implied Volatility) has surged. The 7-day IV grew from 28.40% to 33.28%, paralleled by the 30-day IV's gain from 29.74% to 33.68%, indicating more volatility in the market.

Turning our attention to term structures, BTC and ETH continue to underscore a contango structure, with minimal changes across the different tenors on curve despite the market spike over the weekend.

Diving into the skew dynamics, BTC's 30-day 25-delta (C-P) skew grew from -3.22% to now -1.32%. 7-day skews also increased further from -3.68% to -0.64%, now moving towards a more neutral stance.

Based on data from @Paradigm's recent Asia/Europe Session Hours, significant BTC option activities included the acquisition of 2500x 29-Dec-23 32000/37000 BTC call spreads and 1125x 24-Nov-23 25000 BTC puts. Additionally, there was a sale of 1000x 29-Dec-23 36000 / 29-Mar-24 50000 BTC call calendars. For ETH, the session revealed the purchase of 20,000x 27-Oct-23 to 24-Nov-23 1650 ETH call calendars, alongside a buy of 15,000x 20-Oct-23 1500 ETH puts. There was also a sale of 10,000x 29-Mar-24 1400/2000 ETH bear risk reversals.

Crypto Technical Analysis

Looking at the technical analysis of BTC on the 4-hour chart, the cryptocurrency is currently trading near the $27.1K level and has successfully surpassed the 200-day Simple Moving Average (SMA) — a typically bullish indicator. Such a movement suggests the potential for BTC to target a resistance level of $27.9K, which represents a 3.19% upward deviation from its current position. On the flip side, a key support level is established at $25.8K. Furthermore, the Relative Strength Index (RSI) for this duration stands at 60.07, approaching overbought territories. The 1-hour chart paints an even more bullish picture as BTC successfully breached the descending channel during the past weekend and managed to surpass both the 50 and 100 SMA.

Shifting our focus to ETH on the 4-hour timeframe, the asset is currently trading around $1.55K, having breached its previously established support level at $1.56K. Subsequent to this breakdown, ETH has demonstrated difficulty in reclaiming its position above this threshold. This trend indicates the potential for ETH to move toward a resistance at $1.46K, representing a decline of 5.53% from its prevailing price. The 4-hour RSI registers at 54.32, positioning it within a neutral range. Refocusing on the 1-hour chart data from our preceding week's analysis, we observed ETH's breaking above its descending channel. Mirroring the pattern observed in BTC, ETH not only surpassed the 50 SMA but also the 100 SMA. Such technical advancements suggest a possible short-term bullish sentiment for ETH, though traders should remain attentive to broader market dynamics and potential consolidation phases in the coming sessions.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• Australia fines X, formerly Twitter, for not answering questions on child abuse content

• As Tesla price cuts concede billions in sales, investors push Elon Musk to finally spend on ads

• US will send a second aircraft carrier to the eastern Mediterranean

• Putin to visit China to deepen 'no limits' partnership with Xi

• U.S. chamber will rush through military aid to Israel; Iranian president warns war could expand.

• Southeast Asia haze returns as peatland fires fan global warming fears.

• Asia markets open weaker as investors look ahead to China GDP, Japan inflation data.

Crypto

• FTX estate stakes 5.5M Solana coins.

• South Korean exchange Upbit gets initial license nod from Singapore.

• KYC hook for Uniswap v4 stirs community controversy.

• Latin America takes global lead in preference for centralized exchanges: Report.

• California Gov. Newsom greenlights crypto regulation bill for 2025.

• Ferrari to accept crypto payments in the US.

• ProShares prepares to launch unique Short Ether Strategy ETF.

• Coinbase continues push to compel SEC to act on crypto rulemaking petition.

• SEC reportedly won’t appeal court decision on Grayscale Bitcoin ETF.

• US authorities monitor China-linked Bitcoin miners amid national security concerns: Report.

• 29 Protocols, Including GMX and Camelot, Successfully Applied for Arbitrum Short-Term Incentives

• Apple briefly pulls MetaMask from App Store

Deal Flow

• Account Labs Raises $7.7M and Launches UniPass, a Google-enabled Crypto Wallet

Yours sincerely,
Treehouse Research 🌳