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Our Daily View
What We Are Covering Today
- Chinese stocks rally reach a pivotal point; market participants pricing in a steeper rate path (more in Macro & TradFi)
- The Block CEO steps down after failing to disclose personal loans; Lodestar Finance suffers exploit (more in DeFi & CeFi)
- ETH sharks and whales accumulating ETH at an unprecedented pace (more in On-Chain)
- Spike in IV as BTC collapses below 17K overnight (more in Crypto Derivatives)
- BTC and ETH fail to hold onto its weekend range, dipping lower in today’s Asian session (more in Crypto Technical Analysis)
Macro & TradFi
US markets wrapped up last week in the red, with four out of five sessions trading lower, driven by recession fears. Three major indices lost 2.7-4% WoW. Chinese and Hong Kong stocks rallied throughout the week but are at pivotal levels and look set to consolidate alongside global risk assets; more Chinese official messages were delivered over the weekend (“fatality rate is similar to that of common flu”) that paves the way for further reopening.
US stocks wrapped last Friday’s session lower, with DOW down by 0.9%, S&P 0.73% and NASDAQ 0.7%. US and European government bonds sold off; US 10-year treasury yields jumped more than 10bps to again trade above 3.5%, reflecting the battle around this key level; bonds with similar tenors in gilts and bunds curves also sold off to a similar scale. The market is pricing in a steeper downward central bank yield path beyond the next two Fed meetings than officials hinted.
DeFi & CeFi
- The Block CEO resigns after failing to disclose loans from Alameda
- SBF confirmed as a witness at FTX hearing
- Lodestar Finance’s deposits were drained by an exploit
- GBTC discount widens to 47.9%
- NFT Marketplace Blur surpasses Opensea in daily volume
- Amber Group revealed to have $130m in loans outstanding to crypto lender Vauld
The Block CEO Michael McCaffrey has resigned after it was revealed that he had failed to disclose three loans that he had received from Alameda Research. These loans were undisclosed to the company and were used for funding day-to-day operations, personal real estate purchases and buying out of other investors.
Elsewhere, Lodestar Finance, a lending and borrowing protocol on Arbitrum, fell victim to an exploit. Exploiters managed to drain lending pools by manipulating the exchange rate of plvGLP to 1.83 GLP per plvGLP and borrowing all liquidity subsequently, cashing out the stolen funds while burning a little over 3 million in GLP. The Lodestar Finance team is now in the process of reaching out to the hacker in a bid to recover the stolen funds in exchange for a bug bounty.
Looking at on-chain, the supply distribution of BTC has changed drastically since 2012, with entities holding less than 10 BTC now making up a 14.56% share of the supply, which is up more than 10 times from 1.51% in 2012. (@samjrule)
Elsewhere, Santiment has noted that ETH whales who own between 100 and 1 million ETH have added 561,000 ETH worth about $690 million between December 5th and 6th, bringing cumulative shark & whale holdings to levels last seen before the Merge.
- Funding rate for BTC and ETH remain positive
- BTC 30-day ATM IV rose from 48 to 53 over the weekend, while ETH rose from 63 to 70
- 30-day 25 delta put skew remains flat for both ETH and BTC over the weekend
Future liquidations on Sunday amounted to $36M, of which 92.85% were long liquidations.
On the options front, term structure for BTC remains in contango, with a kink on the 23 December, right before the Christmas holiday, and backwardation on the tail end. 7-day IV rose on Sunday as prices took a sharp turn falling below $17K again. Despite the knee-jerk reaction, 30-day 25 delta put skew remains relatively flat over the weekend.
On the flows side, puts remain to dominate as 24hr change in OI remains put focused at the 15K range. The top traded instrument for BTC since Sunday has been 16 Dec 17K Puts. Looking at strategies, markets seem mixed as there is an equal notional amount of long and short straddles being traded, reflecting sentiment if the market will break out of its range.
Crypto Technical Analysis
Onto TA, BTC consolidated over the weekend before falling in today’s Asian session. Despite staying above the $17.1K level for most of the weekend, price has fallen below the $17.1K-$17.5K resistance area. On the daily, price looks to test its 25-d MA as RSI has failed to break above the neutral level. On the H4, RSI fell below 50, which could likely indicate more bearish momentum in the near term. For now, the next support area to watch is the $16.7K-$16.8K range.
Meanwhile, ETH has moved in a similar fashion to BTC, moving sideways below dropping lower. ETH has managed to hold above the $1.26K level over the weekend but could look to test the support zone of $1.22K-$1.23K.
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Treehouse Research 🌳