Solana Suffers Yet Another Tech Issue; Stronger-Than-Expected PCE Data Adds Pressure For More Rate Hikes

27 Feb 2023, Monday

3:31 AM

Solana Suffers Yet Another Tech Issue; Stronger-Than-Expected PCE Data Adds Pressure For More Rate Hikes

BTC

ETH

S&P Futures 500

$23,490.50

$1,637.25

$3,977.75

(-2.00%)

 (-0.88%)

(-1.01%)

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

  • Higher-than-expected core PCE sends markets for a ride down (more in Macro & TradFi)
  • Solana network suffers first 2023 outage as validators attempt to restart the chain after failing to pinpoint the cause (more in DeFi & CeFi)
  • $TUSD supply on exchanges hits 20-month ATH (more in On-Chain)
  • Term structures remain in contango as IV falls across all maturities over the weekend (more in Crypto Derivatives)
  • BTC and ETH recover from Friday’s dip (more in Crypto Technical Analysis)

Macro & TradFi

On Friday, Federal Reserve's preferred inflation metrics increased stronger-than-expected in January, with core PCE rising about 4.7%, ahead of consensus forecasts of 4.4%. Consumer spending also surged by 1.1% from the prior month, with a seasonally adjusted 1.8% increase in January, the largest in nearly two years, driven by spending on goods such as cars and refrigerators and increased spending at restaurants and hotels. Asian markets open on a mixed footing today after heavy selling pressure seen on US equity indices. China futures opened negative with MSCI A50 down 0.86%. Focus is strong on Chinese equities with JD reporting earnings later this week. A very volatile week ahead for equities, with India 4Q22 GDP release on Tuesday, China manufacturing PMI on Wednesday, and US jobless claims on Thursday.

US stocks suffered one of their worst weekly performances for 2023 as NASDAQ fell 1.67%, SPX traded 1.05% lower and DOW was down 1.09% on Friday. US Treasury yields jumped slightly higher; the 10-year yield closed out 1.80% higher as bonds sold off.

DeFi & CeFi

  • Solana faces yet another tech issue, resulting in on-chain activity freeze
  • Zigzag to distribute 35M $ZZ tokens in airdrop announcement
  • Hashkey Group obtains Hong Kong SFC approval to conduct OTC business
  • Arbitrum-based perpetual DEX Vela Exchange releases beta roadmap
  • Alchemy launches new tool that creates dApp in under 4 minutes
  • Web 3 music streaming platform Audius to integrate with TikTok
  • Huawei Cloud announces the launch of Metaverse and Web3 Alliance, partnering with BlockChain Solutions, Deepbrain Chain, Polygon, Morpheus Labs, Silversea Media, among others

On Saturday, a tech issue on the Solana network caused the blockchain to start "forking" and creating conflicting versions of its transaction history, resulting in a significant drop in its transaction throughput and freezing nearly all on-chain activity. To revive Solana's throughput, some validators began downgrading to the previous version of the software, and later, Solana employees also advocated for the downgrade. However, this did not solve the problem that was causing the performance issues, so the solution shifted to a more drastic one: restarting the chain to the point immediately before the forking.

Meanwhile, ZigZag Exchange has announced that 7 groups will be eligible to receive airdrops, with 6 of them still to be distributed. The exchange has made available eligible addresses for some of the airdrops on its website, including the Trader Airdrop, Gitcoin Donator Airdrop, Atlendis LP Airdrop, and IDO Participant Airdrop. More information can be found here. The exchange expects to distribute tokens to about 110,000 addresses, with 35% of the total supply to be airdropped to these addresses.

On-Chain

$TUSD supply on exchanges hits 20-month high. This comes after TrueUSD started real-time “mint lock” verification of stablecoin reserve to ensure that reserves are adequate before new units can be minted. The reserve data will be evaluated by accounting firm The Network Firm LLP and on-chain oracle Chainlink. According to etherscan data, Binance has also minted nearly $50M in TUSD after it looks to “diversify” its stablecoin holdings from BUSD.

The number of BTC being deposited onto exchanges hit a 1-month low as HODLers look to store their BTC for the longer term. The previous time when the number of BTC deposits onto exchanges hit its low was right before the January rally.

Crypto Derivatives

  • BTC and ETH funding rates rose slightly
  • 30-day ATM IV fell to 48.12% and 53.07% for BTC and ETH respectively
  • 30-day 25 delta call skew decreased to 0.17% for BTC while put skew tightened to -3.85% 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

24.09%

XRP

OKX

BYBIT

15.61%

SOL

OKX

DYDX

13.41%

DOGE

BINANCE

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 72 hours amounted to $279.82M, the majority coming from longs at $143.08M on Friday.

On the options front, IV fell for both BTC and ETH across maturities over the weekend. Term structures remain in contango for BTC and ETH. 7-day RV demonstrated an upward trend over the weekend, reaching 45 and 51 for BTC and ETH respectively. While ETH’s variance risk premium slightly decreased to 3.6%, BTC’s carry turned positive for a brief period during the weekend before falling back around -0.5%.

On the flow side, for BTC options expiring today, open interests for calls and puts are minimal at 392 and at 431 contracts. Taking a closer look at the strike prices for the BTC call options expiring today, we see that there are 211 contracts ITM, concentrated with call options that have the exercise price between $23,250 and $23,500. On the put options side, the majority of the contracts were concentrated on the exercise price between 22K and 23K, acting mostly as hedging instruments for the investors.

Lastly, the VIX on Friday has seen a slight increase to 21.67.

Crypto Technical Analysis

Onto TA, BTC found support at the $22.7K - $22.95K support zone over the weekends. H4 RSI has recovered while daily RSI also remains neutral at 52. The 100D MA remains prime to crossover with the 200D MA if the price remains stable/bullish. The next level to look out for is the $23.85K level if the upward momentum continues.

As for ETH, price broke below the rising channel, reaching a low of $1.59K. 4H RSI bounced off right above the underbought range, jumping to 43, still below the neutral mark. The next level to follow is the $1.66K - $1.69K resistance zone provided price breaks back into the trend channel.

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Treehouse Research 🌳