Jump and Oasis Pull Off Reverse Heist On Wormhole Exploiter; SEC Chair Gary Gensler Calls All Crypto Except Bitcoin As Securities

28 Feb 2023, Tuesday

3:53 AM

Jump and Oasis Pull Off Reverse Heist On Wormhole Exploiter; SEC Chair Gary Gensler Calls All Crypto Except Bitcoin As Securities

BTC

ETH

S&P Futures 500

$23,426.50

$1,628.75

$3,995.25

(-0.27%)

 (-0.51%)

(+0.39%)

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

GM Treehouser 🌳

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January 2023 Market Recap

Our Daily View

What We Are Covering Today

  • Few investors expect a soft landing; Facebook and Snapchat experiment with Chat GPT-like AI technology (more in Macro & TradFi)
  • Jump and Oasis steal back funds from Wormhole exploiter; SEC chairman believes almost all cryptocurrencies except Bitcoin are securities (more in DeFi & CeFi)
  • Gas fees on Ethereum have gradually recovered, primarily due to NFT activity since Blur airdrop (more in On-Chain)
  • IVs climb higher on longer-dated maturities for ETH (more in Crypto Derivatives)
  • BTC and ETH price action remains muted (more in Crypto Technical Analysis)

Macro & TradFi

The latest MLIV Pulse survey with over 2,200 participants has revealed conflicting opinions among investors regarding the future of the US economy. Less than 50% of the respondents foresee a soft landing, which means that inflation would decrease to below 3% without a significant slowdown in economic growth. On the other hand, more than one-third anticipate a hard landing, while approximately 18% do not predict any landing and expect inflation figures will continue to be elevated in the foreseeable future.

Facebook's parent company, Meta Platforms, and Snapchat's parent company, Snap, are both betting on the artificial intelligence (AI) technology popularized by OpenAI's ChatGPT chatbot. Meta is establishing a group focused on accelerating adoption of the so-called generative AI technology across the company, aiming to achieve faster breakthroughs it can apply to different products. Snap has also begun rolling out its AI experimental chatbot to subscribers of its $3.99 monthly subscription service, Snapchat+. Both companies aim to develop AI personas to help users in various ways. Meta focuses on building creative and expressive tools in the short term and Snap focuses on offering a chatbot to help drive subscriptions amid changes to digital advertising.

Major US indices saw a slight gain yesterday, with NASDAQ increasing by 0.63%, SPX by 0.31% and DOW by 0.22%. US Treasury yields have also decreased slightly, with 2-year yield dropping to 4.791% and 10-year yield dropping to 3.931%.

DeFi & CeFi

  • Coinbase to suspend trading of $BUSD from March 13
  • Lotte partners with Polygon to expand NFT project globally
  • Ethereum developers plan to phase out Goerli as testnet token soar
  • Blockchain game developer Curio Research closes $2.9M seed round
  • BitDAO community proposes $200M fund to develop Mantle ecosystem
  • SEC chairman Gary Gensler says all crypto except Bitcoin counts as securities
  • Jump and Oasis execute counter exploit against Wormhome exploiter

Jump Crypto and Oasis.app recovered $225 million of stolen digital assets in a "counter exploit" operation against the hacker of the Wormhole protocol. Wormhole suffered an exploit back in February 2022, resulting in the theft of around $321 million worth of wrapped ETH (wETH). The hacker subsequently moved the stolen funds through various Ethereum-based decentralized applications, including Oasis. In a blog post, Oasis confirmed that it had received a court order from the High Court of England and Wales to retrieve certain assets related to the "Wormhole Exploit" address. The retrieval was initiated via the Oasis Multisig and a court-authorized third party, identified as Jump Crypto. The retrieved assets were transferred to a wallet controlled by the authorized third party. While the operation was successful, it raises concerns about the potential for government intervention and control in the blockchain and DeFi space, despite ongoing efforts to enhance decentralization and self-sovereignty.

Gary Gensler, the SEC chairman, stated in an interview with New York Magazine that almost every crypto transaction is under the SEC's jurisdiction except for spot transactions in bitcoin and purchasing/selling goods or services with cryptocurrencies. He argues that tokens are securities because there is a group in the middle and the public anticipates profits from the group’s action. Despite the crypto lobby's opposition, the SEC has become the primary regulator in the industry. However, the effectiveness of the agency enforcement strategy has often been questioned. The federal government, including the SEC, has failed to prevent crypto fraud in the past year, resulting in tens of billions of losses.

On-Chain

Looking on-chain, the median transaction gas prices on Ethereum have remained low in the last nine months, ranging from 10 to 20 Gwei. However, since the beginning of this year, gas prices have gradually increased to 38 Gwei. This increase is primarily driven by the NFT market, which is showing signs of growth, with a 97% rise in total gas consumption by NFT transactions for two consecutive months. This suggests that activity around NFTs is approaching levels seen during the NFT Boom of 2021 (@glassnode).

Diving deeper, the recent increase in gas demand over the past two weeks can be attributed mainly to developments surrounding the Blur Airdrop. Blur is an NFT marketplace and aggregator that has gained popularity since its launch in October 2022 and is competing with industry leader OpenSea. After the airdrop on February 14th, Blur has overtaken OpenSea and now holds a 78% market share of NFT transfer volume (@glassnode).

Crypto Derivatives

  • BTC and ETH funding rates increased moderately
  • 30-day ATM IV fell to 47.73% and 52.93% for BTC and ETH respectively
  • 30-day 25 delta call skew increased slightly to 0.38% for BTC while put skew tightened to 2.56% for ETH

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On

13.46%

XRP

OKX

BINANCE

9.36%

DOGE

DYDX

OKX

8.02%

BTC

OKX

DYDX

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

For futures, total liquidations over the past 24 hours amounted to $82.75M, the majority coming from longs on Binance and Bybit.

On the options front, term structures remain in contango for BTC and ETH. While IV fell for BTC across maturities, lV for longer maturity contracts on ETH has seen a slight increase. 7-day RV fell for BTC to 44.02 while remaining relatively flat for ETH at 50.81. ETH’s variance risk premium slightly increased to 4.0%, while BTC’s negative carry falls back to around -0.7%.

On the flow side, for BTC options expiring today, open interests for calls and puts remain low at 774 and 751 contracts. Taking a closer look at the strike prices for the BTC call options expiring today, we see that there are only 57.5 contracts that are ITM, the rest of the call options have the strike price concentrated at the $24K level. Put options are mostly concentrated around the 23K and 23.25K strike prices. The bull call spread continues to be the most popular strategy with a $24.45M notional amount.

Lastly, the VIX closed lower to 20.95 yesterday.

Crypto Technical Analysis

Onto TA, BTC price did not see much action intraday, closing 0.28% down. As BTC looks for further directional cues with momentum easing, the levels to look out for are the $22.65K-$22.95K support zone and the $23.85K resistance level.

ETH tells a similar tale to BTC with a muted price movement on the H4 chart before closing 0.49% lower. ETH continues to trade within its rising channel. Meanwhile, daily RSI remains neutral at around 51. The next level to watch out for would be the $1,655 - $1,680 resistance zone and the bottom of the rising channel.

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Treehouse Research 🌳