Markets Prepare For CPI; ConsenSys Launch ZkEVM Private Beta Testnet

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• Stocks rose, bonds slid as market gets ready for US CPI on Thursday; Chinese stocks maintained upside momentum (more in Macro & TradFi)
• ConsenSys announced its zkEVM private beta launch; (more in DeFi & CeFi)
• BTC Percent Supply Last Active 10+ Years reaches ATH (more in On-Chain)
• Near term put skew close to positive territory as sentiment rebounds (more in Crypto Derivatives)
• BTC and ETH continues on their uptrend as ETH 20-day has crossed its 50-day SMA (more in Crypto Technical Analysis)

Macro & TradFi

US stocks rose while bonds slid on a choppy day trading as more high profile asset managers and bankers including Paul Tudor Jones, Jamie Dimon, Blackrock and Fidelity warned that markets are underestimating inflation and terminal rates. Chinese stocks climbed further led by tech and large-cap shares, reflective of foreign portfolio inflow; Hong Kong’s HSI +0.53% and HSTECH +3.15% on the first trading day after HK-mainland border quarantine measures were removed. European stocks fell across the board.

Three main US indices rose; NASDAQ +0.88%, SPX +0.72% and DOW +0.56%. US Treasury bonds sold off with benchmark 10-year yields pushed 8bps wider to trade above 3.61%. DXY consolidated and rallied against most major currencies except CNY. Oil prices closed out around flat.

DeFi & CeFi

• ConsenSys launch private beta zkEVM testnet to selected users
• Solana-based real estate derivatives platform Parcl goes live
• Ethereum L2 solution Mantle launches testnet
• Ethereum L2 solution Boba Network paused its Boba Voyage campaign due to UX issues
• Coinbase and ConsenSys plan to lay off about 950 and 100 employees respectively
• Yearn Finance launches permissionless vault factory
• Bonk Inu to offer more than 15K NFTs collectibles on Magic Eden

ConsenSys has announced the launch of its zkEVM private beta testnet where 100 emails were sent out to whitelisted users. Users will be able to use the tools, infrastructure and wallets to test its smart contracts and dApps on the Goerli testnet. Previously, ConsenSys has stated that they would focus on internal beta testing of zkEVM by end of December 2022 and onboard external users by January 2023.

Meanwhile, yield aggregator Yearn Finance has launched its permissionless vault factory. This will allow users to deploy an auto-compounding yVault for any Curve pool with an active liquidity gauge. These vaults will have no management fees and a 10% performance fee.

On-Chain

Looking on-chain, BTC Amount of Supply Last Active > 10y just reached an ATH of 2,606,865.121 BTC.

Elsewhere, ETH Hourly MVRV (1d MA) just reached a 1-month high of 0.987. The previous 1-month high of 0.986 was observed on 14 December 2022.

Crypto Derivatives

• BTC and ETH funding rate remain positive
• 30-day ATM IV rose for both BTC and ETH to 39.57% and 54.32% respectively
• 30-day 25d put skew further eased for BTC and ETH to -2.79% and -4.79% respectively

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

For futures, total liquidations came in at $57.78M, with the majority coming from shorts at $35.54M.

On the options front, IV has continued catching a bid as market sentiment starts to pick up in the near term. Term structures remain in contango, with the kink at the 13th Jan tenor term structure continuing to steepen as traders begin to bid up event vol ahead of the CPI print. The 7-day put skew has also eased and is now currently close to positive, which can indicate better short-term trader sentiment. VRP remains relatively unchanged for both BTC & ETH at 22.28% and 22.34% respectively.

On the flow front, BTC saw mixed sentiments, as short risk reversals and bull diagonal spreads were the most commonly purchased structure over the past 24h. However, BTC block traders seem to be expecting further upside as large clips of outright calls expiring on Jan 27 were purchased by them. Elsewhere, ETH was dominated by topside flows, as bull diagonal spreads and bull call spreads were heavily purchased,

Lastly, the VIX fell to 20.58 as major indices rebounded.

Crypto Technical Analysis

Onto TA, BTC saw an uptick in price, rising about 1.55% overnight. BTC remains on an upward trend and is approaching the $17.5K resistance level. On the H4, RSI could be forming a bearish divergence as its bullish momentum push price past its trendline.

Meanwhile, ETH has spiked up to $1.34K, going past the $1.32K resistance level and is now challenging the $1.34K resistance level. Similar to BTC, RSI reflects a possible bearish divergence which could limit further near-term upside.

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Daily Readings

TradFi

• Oil edges higher as petroleum demand set to touch record next year

• Stocks rise, bond yields rise with December's upcoming price data in focus

• Wall Street ends higher, Powell comments avoid rate policy

• U.S. banks get ready for shrinking profits and recession

• Dollar stands firm while traders await CPI

• Gemini's Winklevoss calls for removal of DCG chief Barry Silbert

• Japan considers green transition bonds issuance for next fiscal year

• Wells Fargo to shrink mortgage business, exit correspondent lending

• U.S. small-business sentiment skids to half-year low

• China Dec new bank loans beat forecast, 2022 lending at record high

• Asian companies see earnings upgrades by analysts over the past month

• Powell says Fed might have to make unpopular decisions to stabilize prices.

Crypto

• Crypto contagion deepens: Coinbase to lay off about 950 employees

• Voyager gets initial approval for $1 bln Binance deal amid national security concerns

• Blockchain privacy groups urge new US Congress to protect privacy rights.

• Binance pushes back against report stablecoin isn’t fully backed.

• UK MP says stablecoin is a gateway to CBDC, only crypto can ‘disrupt’ settlements.

• Crypto.com delists USDT for Canadian users following OSC ban.

• Crypto service Tap Global becomes first 2023 listing on UK stock exchange.

• Yearn​.finance opens vault deployment access to all users.

• Manta Network conducts record-breaking trusted setup ceremony, 4,000+ contribute.

• Options trading firm Group One takes position in MicroStrategy

• Gemini terminates Genesis loans, officially ends Earn Program

Deal Flow

• The Easy Company secures $14.2M funding for new crypto wallet with social features.

Yours sincerely,
Treehouse Research 🌳