🌳U.S. CPI Rises Amid Market Uncertainty; Platypus DeFi Faces A Third Exploit in 2023

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

• U.S. CPI rises, affecting Fed decisions; Singapore's Q3 GDP grows, sector performances vary (More in Macro & TradFi)
• Stableswap Platypus pauses all pools after $2M hack; Trader Joe’s grocery store files trademark lawsuit against Trader Joe DEX (More in DeFi & CeFi)
• Significant LINK transfers hint at market strategy; GSR's HFT accumulation shows bullish sentiment (More in On-Chain)
• BTC's IV drops further; contango formation suggests calm near-term macro outlook (More in Crypto Derivatives)
• Downward parallel channels observed with both BTC and ETH while the technical indicators of ETH show a grimmer future (More in Crypto Technical Analysis)

Macro & TradFi

U.S. consumer prices rose robustly for a second consecutive month, with the core Consumer Price Index (CPI) increasing by 0.3% in September, as per data from the Bureau of Labor Statistics. This aligns with the Federal Reserve's stance of maintaining elevated interest rates to mitigate inflation. Influenced by a strong labor market bolstering consumer demand, inflationary pressures persist above the Fed's target. Although some anticipate the central bank to hold steady on interest rates in their upcoming November 1 meeting, the broader market sentiment remains split, with factors like ongoing geopolitical tensions and potential energy cost surges adding layers of complexity to the inflationary trajectory.

In other news, Singapore's Q3 2023 GDP rose by 0.7% YoY, outpacing the prior quarter's 0.5% growth, with a QoQ seasonally-adjusted expansion of 1%, according to the Ministry of Trade and Industry's (MTI) early estimates. While the manufacturing sector contracted 5% YoY due to widespread output declines, the construction sector surged 6% YoY, supported by both public and private construction. The services sector presented a mixed bag, with the wholesale trade and transport sector growing 0.6% YoY, driven primarily by fuels, chemicals, and air transport, while the finance and insurance sector faced challenges, particularly in banking and insurance. The remaining service sectors, including accommodation and food services, expanded by 4.7% YoY, propelled by increased international visitor arrivals.

Amidst heightened concerns over the Fed's handling of inflation underscored by the latest data, US equities witnessed a downward trend, with Treasury yields reflecting an upward trajectory. The DJIA, NASDAQ, and S&P 500 registered declines of 0.51%, 0.37%, and 0.62%, respectively. In Asia, indices such as Japan's Topix dropped 0.8%, South Korea's Kospi dipped 0.7%, Hong Kong's Hang Seng receded by 1.4%, and China's CSI 300 retreated 0.8%. Delta Airlines saw a 2.39% decrease after adjusting its full-year guidance, attributing it to rising fuel costs, while Walgreens Boots Alliance enjoyed a 7.04% spike even though the pharmacy behemoth missed its earnings estimates. All eyes are now set on the release of China's CPI data, expected today.

DeFi & CeFi

• Stableswap Platypus pauses all pools after $2M hack
• Trader Joe’s grocery store files trademark lawsuit against Trader Joe DEX
• Scroll zkEVM launches
• Voyager ex-CEO charged by U.S regulators with fraud, making false claims
• Frax launched sFRAX, initially providing 10% yield
• Mastercard announces successful wrapped CBDC trial results

DeFi protocol Platypus has suffered another flash loan exploit, losing over $2M in assets across three separate attacks. Blockchain security platform CertiK noted that the first attack occurred on Oct 12, extracting $1.2M from the platform, followed by a second attack hours later that took $575K in assets. The third attack happened just a minute later, resulting in the loss of $450K. Platypus released an announcement on Twitter and suspended its pools in response to the exploits. This marks the third attack on Platypus in 2023, with a significant exploit in February leading to the depegging of the Platypus USD (USP) stablecoin and a separate flash loan attack in July.

In other news, United States supermarket chain Trader Joe's has filed a complaint in California against the decentralized crypto exchange Trader Joe, alleging federal trademark infringement and dilution claims. According to the lawsuit, Trader Joe and its co-founder Cheng Chieh Liu used many of the supermarket's branding elements, ideas, and a similar narrative for their fictional character. The lawsuit also claims that the defendants knowingly committed fraud to obscure their origin story. Trader Joe's lawyers criticize the exchange for using "confusingly similar" names on its website, social media accounts, and other platforms. The lawsuit seeks to stop Trader Joe from using its name and claims damages for trademark infringement and dilution.

On-Chain

According to analysis from @Spotonchain, two significant cryptocurrency addresses, identified as 0xbbd and 0x4e8, recently transferred a combined total of 300K LINK tokens to Binance at an average price of $7.362, amounting to approximately $2.21M. Intriguingly, these addresses are believed to be associated with a single institutional entity that, in the previous July, acquired 1.574M LINK tokens at an average rate of $7.089, equivalent to $11.2M. Presently, this institution retains an estimated 1.09M LINK, valued around $8M, spread across six distinct addresses. The strategic movements of such a sizable LINK holder can have implications for market dynamics; monitoring their activity may offer insights into potential market trends.

Elsewhere, an analysis on @lookonchain showed that GSR, a prominent market maker in the cryptocurrency market, recently made a notable acquisition of 5.17M HFT tokens from Binance, valued at approximately $1.53M. With this recent purchase, GSR has bolstered its holdings to an impressive 41.7M HFT, equivalent to $12.5M. It's crucial to highlight that GSR's current possession now represents 20% of the HFT's entire circulating supply. Such a significant accumulation suggests a bullish sentiment from GSR on the HFT token.

Crypto Derivatives

• Funding rates remain positive for both BTC and ETH.
• Deribit Implied Volatility Index (DVOL) for BTC and ETH remained relatively unchanged at 35.16% and 36.51%, respectively.
• 30-day 25-delta skew (C-P) for BTC and ETH maintained at -3.22% and -5.27%, respectively.
• The futures market witnessed $51.46M worth of liquidations yesterday, with longs representing 74.97% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

In the recent 24-hour analysis, BTC's IV (Implied Volatility) has tumbled further. The 7-day IV contracted from 31.35% to 28.40%, paralleled by the 30-day IV's decrement from 31.11% to 29.47%. This comes as the CPI, excluding food and energy costs, met estimates at 0.3% MoM and 4.1% YoY, suggesting that the Fed may keep interest rates level.

Turning our attention to term structures, BTC continues to underscore a contango formation, with a fall in IV at the front end of the curve. ETH, on the other hand, moved back into contango from the slight backwardation stance, indicating a resumption of market normality.

Diving into the skew dynamics, BTC's 30-day 25-delta (C-P) skew fell from -2.67% to -3.22%, the lowest level in the last 30 days. 7-day skews increased slightly from -4.47% to -3.68%, indicating that BTC option investors are increasingly hedging against downside movements of the market.

Based on data from @Paradigm's recent Asia/Europe Session Hours, significant BTC option activities included the acquisition of 1000x 29-Dec-23 32000/37000 BTC call spreads and 350x 14-Oct-23 27250 BTC calls. For ETH, the session revealed the purchase of 20,000x 27-Oct-23 to 24-Nov-23 1650 ETH call calendars, alongside a buy of 5750x custom options strategy involving +1.00-Call-24 Nov 23 1600 and -2.00-Call-24 Nov 23 1700.

Crypto Technical Analysis

Shifting our focus to technical analysis for BTC, the bearish trend persists, with the final 200 SMA line breached on the 4-hour timeframe. Despite a slight retracement in the past few hours, BTC has maintained a position below the 200 SMA level. Upon examining the 1-hour chart, it becomes evident that the recent downtrend has formed a downward parallel channel, presently nearing the upper boundary. This suggests a potential reversal to the downside in the near future. If this analysis unfolds as anticipated, the price is likely to gravitate toward the lower channel boundary, signifying a nearly 3% decline towards the $26K level before heading towards the potential support at the 30-day low, roughly around $25.6K.

Shifting our focus to ETH, a grimmer scenario has materialized with a continued decline below the previously noted $1.54K support level. Although there has been a slight rebound above this level in the past few hours, no definitive signs of a reversal trend have surfaced. On the 1-hour chart, a downward-sloping channel has similarly appeared, implying the potential for further selling pressure. Should the price persist in its descent, the next support level can only be found on the daily timeframe, within the range of $1.42-$1.45K, a zone last visited in March. Conversely, if ETH regains its footing above this level and initiates a reversal, the price is expected to advance toward the now support-turned-resistance at $1.57K before targeting the $1.65K resistance level.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• US Consumer Prices Rise at Brisk Pace for Second Straight Month

• Fed's Powell set to speak Oct 19 ahead of blackout period

• Birkenstock's stock loses footing in second day on Wall Street

• Wall Street falls as Treasury yields rise, investors digest inflation data

• Surging rents lift US consumer prices; underlying inflation grinding lower

• Housing remains a puzzle in Fed's inflation fight

• Israel-Hamas updates: Britain orders deployment of military assets to Mediterranean; at least 27 Americans killed.

• Biden's Saudi-Israel normalization plans appear distant as Israel pounds Gaza in offensive.

• Billboards in Israel were briefly hacked to display pro-Hamas messages as cyberwar ramps up.

Crypto

• Coinbase Sounds Alarm on IRS Crypto Tax Proposal.

• Ethereum Has Nearly Cleared Out Validator Queue, a Sign of Weak Staking Demand.

• Scroll zkEVM Launches, Blockchain Data Shows, Competing With Polygon, Matter Labs.

• Voyager Ex-CEO Charged by U.S. Regulators With Fraud, Making False Claims.

• UK FCA Working on Blue Print for Fund Tokenization Due This Year.

• Alameda Lost Nearly $200M to Phishing Attacks, Ex-Engineer Says.

• Reddit's Fortnite Token BRICK More Than Doubles After Two-Months of Decline.

• DOJ charges exec over ‘cherry picking’ scheme involving crypto futures.

• House committee chairman threatens SEC chair with subpoena, but not over crypto.

• Trader Joe’s grocery store files trademark lawsuit against Trader Joe DEX.

• China opens industrial park for digital yuan CBDC development in Shenzhen.

• Mastercard announces successful wrapped CBDC trial results.

• Stableswap Platypus Hacked for Over $2M, Pauses All Pools

• Frax Launched sFRAX, Initially Providing 10% Yield

• Real-world asset stablecoin depegs after collateral turns illiquid

Deal Flow

• Binance Labs Invested in Layer 1 Network Initia

Yours sincerely,
Treehouse Research 🌳