Inflation Slows To The Lowest Level Since March 2021; Uniswap Unveiled V4 Draft Code

14 Jun 2023, Wednesday

3:08 AM

Inflation Slows To The Lowest Level Since March 2021; Uniswap Unveiled V4 Draft Code



S&P Futures 500







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

  • CPI cools down to 4% leading to a jump in stock markets; Trump pleaded not guilty for his 37 charges (more in Macro & TradFi)
  • Hinman documents linked to XRP price jump; Uniswap unveils draft code for v4 (more in DeFi & CeFi)
  • Data displays differing behavior among Bitcoin holders, heightened DeFi protocol engagement (more in On-Chain)
  • Implied volatilities remain elevated as we inch closer to FOMC; ETH Vol sellers back in action with more than 39K notional vega sold (more in Crypto Derivatives)
  • Bollinger Bands in BTC and ETH's 1-hour charts may signal imminent volatility, with prices encountering key resistance levels (more in Crypto Technical Analysis)

Macro & TradFi

US inflation continued to cool in May as the consumer price index (CPI) rose by 4% compared to the previous year, the smallest increase since March 2021. Core services inflation, excluding housing, also reached the slowest pace in 15 months. While acknowledging that inflation remains above the 2% target, the Federal Reserve is expected to skip a rate increase at its two-day policy meeting. Investors have reduced the odds of a rate hike this week, and stocks have risen as a result. Core inflation, which excludes food and energy items, has remained persistently elevated, rising by 0.4% for a third consecutive month. However, rising prices of used cars, a major contributing factor to core inflation, are expected to decline going forward. Rent, the largest component of the index, has also shown smaller monthly increases. Economists anticipate a significant slowdown in core inflation in the coming months, but cautioned that progress should not be mistaken for mission accomplished. Fed officials, including Chair Jerome Powell, have indicated a preference to skip a rate hike at this meeting, while leaving the door open to future tightening if necessary.

Meanwhile, Former President Donald Trump has pleaded not guilty to federal charges of mishandling state secrets and immediately resumed rallying supporters for his 2024 presidential bid. The arrangement followed a historic indictment by the Justice Department, alleging that Trump willfully refused to return top-secret government documents and conspired to obstruct US officials' efforts to recover them. Despite the charges, Trump aims to use this situation to garner support for his White House comeback effort and strengthen his position among the crowded field of Republican presidential candidates. His campaign has already raised significant funds following his indictment. While facing mounting legal threats, Trump continues to maintain a substantial lead over other contenders for the 2024 GOP nomination.

Lastly, major US equities indices have closed higher following the positive announcement on slowing CPI figures. Specifically, the S&P 500 rose by 0.7%, reaching a new high for 2023, while the Nasdaq Composite climbed 0.8% and the Dow Jones Industrial Average increased by 0.4%. Almost every sector of the U.S. economy experienced gains, except for utilities, with the industrial and materials-producing sectors leading the way. This broader market rally suggests that the market is moving beyond the dominance of tech giants. Investors are now eagerly awaiting the Federal Reserve's decision on interest rates, with expectations that the central bank will pause its rate hikes after 10 consecutive increases.

DeFi & CeFi

  • Documents related to Hinman's speech released in SEC-Ripple lawsuit
  • Uniswap releases draft code for V4, seeks community feedback
  • Binance.US and SEC agree to negotiate to avoid full asset freeze
  • Lido switches to wstETH as liquidity incentive token in June
  • Polygon announces Polygon 2.0 with upgrades to protocol, token economics, and governance
  • 21Shares to offer Lido Exchange Traded Product on European stock exchanges

XRP prices surged 7.4% in 24 hours, defying the crypto market trend, as traders bet on a favorable outcome in Ripple Labs' lawsuit against the SEC. The release of documents tied to former SEC director William Hinman, who stated that Bitcoin and Ether were not securities, added to the speculation. Ripple argues that Hinman's remarks support their case, suggesting that XRP should not be considered a security. The lawsuit's outcome is significant for XRP's market performance due to Ripple's association with the token.

Meanwhile, Uniswap Labs has unveiled a draft of the code for Uniswap V4. The new version introduces "hooks" that enable developers to create customized liquidity pools, fostering innovation and flexibility. Moreover, features like time-weighted average market makers and on-chain limit orders could be introduced. On the whole, Uniswap V4 aims to expedite the evolution of automated market maker exchanges and enhance AMM innovation. This release of the code initiates the process of community engagement and iteration before the final deployment of Uniswap V4.

Finally, in the ongoing case between the U.S. Securities and Exchange Commission (SEC) and Binance and Binance.US, the federal judge, Amy Berman Jackson, declined to issue a temporary restraining order freezing the U.S. trading platform's assets. This allows Binance.US to continue operations while negotiating restrictions with the regulator. The judge ordered Binance.US to provide a list of business expenses, and both parties were instructed to continue negotiations. Here, Binance.US expressed its willingness to continue operating and requested normal expenses. Later, the judge also probed the distinction between crypto assets and securities, emphasizing the need for clarification.


The US regulatory environment remains hostile as the SEC charges Binance and Coinbase for securities violations. Using on-chain data, we analyze exchange inflows to determine the behavior of various investor cohorts. The Bitcoin Short Term Holders chart shows that the short-term holder (STH) cohort has transferred 0.93% of their total retained balance into exchanges over the past week. Although this figure hasn't surpassed the 1% benchmark typically linked to high volatility events, it represents a significant surge in comparison to the baseline set during the 2021-22 cycle. In contrast, Bitcoin Long-Term Holders have remained impressively unperturbed, exhibiting no clear response to recent developments. Their exchange inflow volume this week constitutes a mere 0.004% of their entire holdings.

In addition, there's noticeable evidence pointing to a shift in capital allocation between BTC and ETH. Although the percentage trading volume for both assets was equally matched by the close of 2022, Ethereum's share in futures volume has experienced a considerable decline in 2023, showing a clear reversal pattern relative to BTC. As seen in the Perp Volume Dominance chart on @glassnode, BTC currently accounts for 65.5% of the trading volume between these two leading cryptocurrencies. This indicates that investor preferences are potentially changing as investors are injecting more liquidity towards BTC as more of the “safe haven” asset compared to ETH.

Crypto Derivatives

  • BTC and ETH funding rates remain positive while alts are showing negative funding rates
  • 30-day ATM IV for both BTC and ETH fell to 40.60% and 41.13%, respectively
  • Deribit Implied Volatility Index (DVOL) for both BTC and ETH rose to 48.08% and 50.48%, respectively.
  • 30-day 25-delta skew for both BTC and ETH fell to -2.28% and -4.72%, respectively

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On













Source: @CexyArbBot Telegram

1) Pairs observed include BTC, ETH, SOL, BNB, XRP, LTC, DOGE vs USDT perps 

2) CEX observed include Binance, Bybit, OKX & DYDX

@CexyArbBot allows you to customize CEX, 100+ pairs & lookback periods combo

Yesterday, within the futures market, around $70M worth of liquidations took place, with an equal distribution between long and short liquidations, as prices whipsawed post-CPI.

For options, implied volatilities (IV) for near-dated options fell following the CPI release, but remains elevated as traders shift their focus towards the upcoming FOMC meeting. Apart from the 7-day IVs, IVs along the curve have managed to maintain their elevated levels since the beginning of the week. The term structure on the front-end of the curve continues to display backwardation, although front-dated vols are now slightly lower compared to the previous day. There is a strong likelihood that near-dated volatilities will experience another increase as we approach the FOMC meeting, especially for the options expiring on 15 Jun 23.

For skew, both BTC and ETH continue to price in higher premium for puts over calls. Notably, the skew levels for nearer-dated options are more volatile compared to those for options with longer expiration dates. Additionally, there is a slight disparity in skew levels between BTC and ETH. BTC still exhibits call skew for options with longer expiries, whereas ETH appears to price in a higher level of put skew across all its tenors. Based on this observation, it is likely that BTC still holds the safe haven bid amidst this period of uncertainty, while ETH maintains its fundamental connection with altcoins that have recently experienced significant drawdowns.

In terms of trading activity, there has been a notable shift in flows towards nearer-dated options, driven by the series of upcoming events in the current week as traders aim to benefit from convexity around the June timeframe. Furthermore, a substantial buyer has emerged in the BTC market, showing interest in vega exposure for both the July and December expiries, resulting in a combined notional vega of 10K. Additionally, bull put spreads have gained popularity as a trading strategy, with indications that traders believe it is unlikely for BTC to drop below 24K, as evidenced by the chosen strike prices in the structure.

For ETH, traders are back at hammering down ETH vol as a flurry of short vol structures like strangles and straddles hit the tape. A combined total notional of 34.9K vega was sold yesterday, with mixed tenors from June all the way to December. However, most of the vega sold were primarily in July and December tenors.

Lastly, the VIX dipped slightly to 14.61%, back below the 15% handle.

Crypto Technical Analysis

Turning our attention to BTC's 1-hour chart, we observe the Bollinger Bands converging tightly. This tight convergence is a result of lower volatility in recent periods and could serve as an indicator of a potential imminent large price move. Currently, BTC's price is encountering resistance at the 25.9K mark, indicating a struggle for the bulls to breach this level. Furthermore, the Relative Strength Index (RSI) is currently at 52.06, just above the midpoint, suggesting a relatively balanced state of market forces.

Similarly, for ETH's 1-hour chart, it's noteworthy that the Bollinger Bands are showcasing a phase of tight convergence. As of now, ETH seems to be in a phase of consolidation, persistently testing the support at the 1.7K mark. The relatively static price action suggests a stand-off between buyers and sellers. The Relative Strength Index (RSI), which currently stands at 52.9, substantiates this observation, suggesting a balanced market environment with neither the buyers nor the sellers commanding a clear dominance.

In the ETH/BTC pair's technical landscape, a discernible descending channel pattern is currently in play. This formation typically signifies a bearish sentiment, although breakout potential exists in either direction. At present, ETH seems to be encountering substantial support at the 0.067 level within the channel range. The current positioning of the Relative Strength Index (RSI), standing at 40.05, hints at a slightly bearish tilt in the market momentum. If the RSI continues to decline, it could possibly indicate increased selling pressure. However, if the price manages to bounce back from the current support, we could see a shift in the momentum.

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