GnosisDAO Token Approved As DAI Collateral; Chinese Assets Under Pressure Amid Protests Against Lockdowns

28 Nov 2022, Monday

2:13 AM

GnosisDAO Token Approved As DAI Collateral; Chinese Assets Under Pressure Amid Protests Against Lockdowns

BTC

ETH

S&P Futures 500

$16,454.50

$1,196.00

$4,012.75

(-0.37%)

(+0.22%)

(-0.72%)

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

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Our Daily View

What We Are Covering Today

  • US & European equities wrapped Thanksgiving week higher; China saw COVID-induced street demonstrations, tanking CNH (more in Macro & TradFi)
  • Binance releases snapshot for BTC proof of reserves (more in DeFi & CeFi)
  • BTC Hash Ribbon approaches crossover; Exchange balance rose slightly in the past week (more in On-Chain)
  • Long-dated IV holds steady; Put skew continues to ease higher (more in Crypto Derivatives)
  • BTC and ETH consolidated over the weekend before edging lower into today’s Asia session (more in Crypto Technical Analysis)

Macro & TradFi

US markets closed little changed in a curtailed session after Thanksgiving. Asia markets opened lower today as recently intensified COVID lockdowns that cost lives in China spurred widespread protests across multiple cities. Residents in Urumqi and Shanghai took to the streets while Beijing grinded to a halt with elevated measures from policymakers. USDCNH jumped above 7.24, a ~0.75% move reflecting further bearish bets on the country’s pressured productivity and consumer economy.

US indices diverged in post-Thanksgiving trading; DOW climbed 0.45% while NASDAQ closed 0.52% lower and S&P churned around flat. All three indices ended the week higher. European equity benchmarks also closed the week higher, as France’s CAC and Germany’s DAX indices both recorded 8 weekly gains in a row. The dollar slid by 0.2%, and the 10Y treasury yield fell by 4.1 bps to 3.67%. The dollar bounced slightly while WTI crude traded lower by almost 2% to $75. US Treasury curves were little changed.

DeFi & CeFi

  • MakerDAO approves GnosisDAO token as DAI collateral
  • Binance releases its BTC proof-of-reserves system as it rolls out proof of reserves
  • Tranchess goes live on Ethereum
  • Dogecoin pumped double digits over the weekend

In September, MakerDAO voted for GnosisDAO token to be used as DAI collateral, with 91% approval. An executive vote in December will be passed to formalize the process for having Gnosis’ SAFE as collateral. Currently, the proposal plans to have a maximum supply of DAI backed by Gnosis at 5 million and a floor of 100,000, a stability fee of 2.5% and a liquidation ratio of 350%. Elsewhere, Binance has recently provided its proof of reserves for BTC. It provided a snapshot of its balances revealing a balance of 582,485 BTC.

On-Chain

For on-chain, the BTC hash ribbon is slowly approaching a crossover. When the 30D MA (green) crosses below the 60D MA (blue), it has historically represented miners’ capitulation as falling hash rate could indicate rising mining costs relative to profits. However, looking back in June, when the 30D was below the 60D, the spot price of BTC seems to have gradually increased with the exception of the initial plunge that happened earlier in that month.

Elsewhere, the exchange balance appears to have plateaued over the past week, with no notable spikes in outflows. In fact, both USD and BTC exchange balances increased slightly over the last week.

Crypto Derivatives

  • Funding rate remains positive on both BTC and ETH perps
  • 30-day IV fell for both BTC and ETH to 60.98% and 76.80%, respectively
  • 30-day 25d put skew eased for both BTC and ETH to -10.97% and -13.92%, respectively

For futures, total liquidations came in at $118M over the weekend, with the majority coming from longs at $64M.

On the options front, IV continues to fall, particularly on short-dated expiries due to DOV flows and low realized vol weekends, while IV on longer-dated expiries remains stable. IV rose slightly during the early trading session on Monday as spot dipped. Term structure is still in contango, with lower vols across the surface, while put skew eased higher. The 7-day put skew has now returned to pre-FTX levels.

On the flow side, the weekend saw more topside flows as bull call spreads dominated the tape for BTC. Furthermore, traders are now finding value in buying volatility, as clips of long straddles were traded on both BTC and ETH, most likely taking advantage of the recent quick downward reversal in vols.

Crypto Technical Analysis

Onto TA, BTC continues to edge lower over the past three days, falling about 1% in total. BTC has continued to make lower highs since 10 Nov, failing to break above the trendline. On the daily, RSI ranges below the 50 neutral level. The next support to focus on will be the $16K level should price maintain its bearish structure.

Meanwhile, for ETH, price have consolidated over the past three days as volume fell over the weekend. Similar to BTC, price action has failed to break above its trendline as daily RSI is well below the neutral level. Currently, price dipped lower into today’s Asia session and looks set to test its $1150 support level in the near term.

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