Meta Deepens Foray Into Web3 With NFT Support on Instagram; Deribit Hot Wallet Hacked For $28M; S&P500 Suffered Its Worst Fall Since January 2021 After FOMC Meeting

03 Nov 2022, Thursday

3:00 AM

Meta Deepens Foray Into Web3 With NFT Support on Instagram; Deribit Hot Wallet Hacked For $28M; S&P500 Suffered Its Worst Fall Since January 2021 After FOMC Meeting

BTC

ETH

S&P 500 Futures

$20,206

$1,531.25

$3765.25

(-2.74%)

 (-3.50%)

(-1.47%)

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


GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

  • Fed raises interest rates by 75 basis points for the fourth consecutive time; Powell quells hopes of an early pivot but could lower rate of increase (more in Macro & TradFi)
  • Crypto derivatives exchange Deribit hacked for $28M; Meta announces support for Polygon NFTs on Instagram (more in DeFi & CeFi)
  • Hash rates and miner difficulty reaches new highs while the exchange inflow volumes continue to rise (more in On-Chain)
  • IV dips and put-skews tightens post-FOMC (more in Crypto Derivatives)
  • BTC and ETH break below their range held in the past 2 days (more in Crypto Technical Analysis)

Macro & TradFi

GM! Federal Reserve has raised interest rates by 75 basis points for the fourth time in a row this year, pushing ahead with its most aggressive tightening campaign since 1980s to tame inflation. Fed Chair Jerome Powell has said that the “ultimate level of interest rates will be higher than previously expected” based on the economic data since their previous meeting. He warns that it is “premature to be thinking about pausing” but hinted that the central bank might hike rates at future meetings.

US stocks reversed early gains in the day as hopes of a “Fed pivot” diminished, with the S&P 500 suffering its worst rout since January 2021. The Dow dipped 1.5%, the S&P 500 fell 2.5% and the Nasdaq lost 3.4%. The 10Y treasury yield rose to 4.059%, up by 0.007% whereas the 2Y treasury yield jumped to 4.568%, up by 0.03%. The dollar index also saw a gain of about 0.4%.

DeFi & CeFi

  • DeFi TVL fell -1.38%; Ethereum TVL dipped -1.20%
  • Deribit hot wallet hacked for 28M
  • DeFi protocol Centrifuge closed $4 million strategic round with Coinbase Ventures and others
  • Evmos Development Team Tharsis Labs closes $27 million funding round Led by Polychain Capital
  • New Order DAO to airdrop $Y2K to $veNEWO Lockers
  • Oracle attack on Solend resulting in $1.26m in bad debt
  • Meta announces the support of selling and minting of Polygon NFTs on Instagram

Crypto derivatives exchange Deribit hot wallet was exploited for $28M but has assured that client funds are safe and all losses are covered by company reserves. The total loss amounted to 9,080 Ether and 691 BTC. CZ also tweeted that the Binance team will monitor and help freeze any incoming Deribit funds that are stolen.

Venture DAO New Order announced that it will receive 10% of the total $Y2K supply from Y2K Finance, an insurance protocol for pegged assets incubated by New Order DAO. 20% of the token allocation will be airdropped to $veNEWO lockers, while the other 80% will be allocated to the DAO treasury.

On-Chain

As miner hashrate and difficulty hit new records, the profit margins for Bitcoin miners will remain constrained. This can indicate increased mining company selling and price pressure in the coming weeks.

As the bitcoin price rises, open interest on the derivatives market has decreased, signaling that traders have closed their long bets (conceivably taking profits). In the case of Ethereum, open interest is getting close to levels that are typical with price peaks. Lastly, a two-year peak in Bitcoin spot trading volume relative to derivative volume suggests a potential trend change.

Crypto Derivatives

Funding rate remains positive on BTC and ETH
• 30-day IV fell for BTC to 49,5%, while diving to 71.3% for ETH
• 30-day 25d put skew tightened for BTC and ETH to -4.21 % and -2.05% respectively.

For futures, total liquidations yesterday amounted to $177.2M, with 69.35% of that being long liquidations.

On the options front, IV plunged for both BTC and ETH post FOMC. The 24-hour put-call ratio for BTC and ETH increased to 0.290 and 0.541 respectively. The term structures for BTC and ETH are currently still in backwardation, with a kink at the Oct-11 expiries for BTC. Put skews have tightened amid falling spot prices. Elsewhere, the VIX lost 1% despite the spot market falling. This is something that we rarely see and could possibly indicate that the market is already well-hedged pre-FOMC, and is not demanding additional downside protection as of now.

Lastly, on the flow side, short straddles for BTC and ETH have both seen heavy buying in the past 24 hours, which could indicate that traders do not expect much price movement in the short term. Other dominant strategies have been the bear put spread for BTC and the bear diagonal spread for ETH.

Crypto Technical Analysis

BTC closed 1.61% lower at $20,151. On the H4, BTC managed to retest the $20,800 resistance yesterday but rejected strongly and broke below the $20,220 support of the range held in the past 2 days. Currently, BTC sits within the tight range of $20,000 to $20,220. A break below the range could lead us to the $19,250 support.

ETH closed 3.81% lower at $1518.60. On the H4, price tried to retest $1635, getting close to $1620 before rejecting it strongly. It has now broken below the $1550 support of the range held in the past 2 days. Currently, ETH sits within the tight range of $1480 to $1550. A break below the range could lead us to the $1340 support.

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Yours sincerely,
Treehouse Research 🌳

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