🌳 US Inflation Slows to 3%, Lowest in 2 years; Starknet Launched 'Quantum Leap’ Upgrade

GM Treehouser 🌳

Welcome to our Treehouse Daily newsletter, where Treehouse brings you financial news and insights free daily! We believe you’ll find this helpful.

Also, in case you have missed it, check out our latest research piece 👇

Our Daily View

What We Are Covering Today

• UK mortgage rates reach 15-year high; UK wage growth reaches record high as labor market cools (more in Macro & TradFi)
• Circle CEO optimistic on Yuan-backed stablecoins and Hong Kong regulations; Web3 contributors remain resilient amid crypto winter (more in DeFi & CeFi)
• BTC Supply in Profit jumps to 18 month high; BTC Relative Unrealized Loss sees re-accumulation period in the near-term (more in On-Chain)
• BTC IV continues to trade higher than ETH; BTC’s call skew continue to rise signalling near-term optimism (more in Crypto Derivatives)
• BTC's consolidation suggests a resistance break; ETH and CRV display potential uptrends (more in Crypto Technical Analysis)

Macro & TradFi

The consumer price index (CPI) saw a moderate increase of 0.2% last month, while the annual CPI advance was 3.0%, marking the smallest it has been since March 2021. The Labor Department's report revealed a significant slowdown in underlying inflation, prompting a rally in stock and bond markets. However, the easing of price pressures might not dissuade the Federal Reserve from resuming interest rate hikes, as the Fed has signaled its intention to implement two rate hikes this year, with one expected to take place this month.

A survey conducted by the Royal Institution of Chartered Surveyors (RICS) indicated that prospective home buyers in the UK exhibited the sharpest retreat from the property market in eight months. The house price index plummeted to -46% in June, falling below economists' expectations, while the measure of new buyer interest declined by 25 points to -45%. This cooling trend reflects the impact of higher borrowing costs on affordability, as the Bank of England raised interest rates to tackle inflation. Although prices have only slightly declined from recent highs, further decreases are possible. However, the limited supply of properties for sale is helping to sustain values, particularly in London.

Yesterday, US markets climbed, with the S&P 500 reaching a new high for 2023, the Nasdaq Composite seeing a 1.15% gain and the Dow Jones Industrial Average rising 0.25%. Most Asia-Pacific markets also rose after the US inflation rate for June came in lower than expected at 3%. South Korea's Kospi and Kosdaq experienced marginal changes, while Australia's S&P/ASX 200 led gains with a 1.06% increase. In Japan, the Nikkei 225 climbed 0.36% and the Topix saw a slight rise.

DeFi & CeFi

• Uniswap V3 goes live on Avalanche
• Google Play allows apps and games to offer NFTs
• Starknet deployed Quantum Leap upgrade
• Ribbon proposes to merge into Aevo, wind down the RBN token and launch a new token AEVO
• CoW Swap introduces CoW Hooks, enabling custom-coded DeFi actions
• Vanguard increased investment in Bitcoin mining firms Marathon Digital and Riot

Starknet, a ZK-rollup (zero-knowledge proof) scaling solution for Ethereum, has successfully launched its "Quantum Leap" upgrade. This upgrade aims to enhance the scalability of the blockchain by increasing the number of transactions per second (TPS) and reducing confirmation times. Quantum Leap was initially deployed on the Goerli testnet and received overwhelming support from the community, with 97.91% of voters in favor of moving it to the mainnet. During testing, the StarkWare team reported TPS reaching as high as 90 at times, with a consistent TPS of 37. The deployment of the Quantum Leap upgrade is expected to significantly improve the performance and efficiency of Starknet, providing users with a faster and more scalable layer 2 solution for their Ethereum transactions.

CoW Protocol has introduced CoW Hooks, a new feature that enables users to implement custom-coded DeFi actions before and/or after their trades. With CoW Hooks, users can chain together complex actions such as trading, bridging, staking, and depositing, among others. These hooks execute the entire sequence as a single transaction, and users only pay gas fees in their sell token if the transaction is successful. This feature is highly beneficial for developers and advanced traders who can use code to express their intent for actions to be performed before and after a swap. CoW Hooks enhance the CoW Protocol intent language, transforming it into a multi-purpose intent execution engine. "Intent language" refers to a system that allows users to express their desired actions on the Ethereum blockchain.

On-Chain

According to Glassnode, the BTC Supply Last Active Bands consistently fluctuate near their all-time highs, indicating that experienced investors continue to prioritize HODLing (holding onto their coins) as a dominant strategy. As long-term investors accumulate more coins, these metrics tend to increase. Conversely, when long-term investors start using or distributing their coins, this metric decreases, causing older coins to change hands and become "young" again.

Elsewhere, the ETH Median Gas Usage (7-day Moving Average) has recently reached a one-month high, standing at 47,620.232. The previous 1-month high of 47,600.560 was observed on 10 July 2023. It is worth noting that the decline in median gas usage witnessed in mid-June coincided with the lowest quarterly point of Pepecoin's price. Subsequently, both the token's price and the median gas usage experienced an increase in the following weeks. This correlation suggests a possible resurgence of interest in meme coins, leading to increased transactions, similar to what was observed in April of this year.

Crypto Derivatives

• Funding rates turned slightly negative for both BTC and ETH
• Deribit Implied Volatility Index (DVOL) is 41.21% and 40.32% for BTC and ETH respectively
• 30-day 25-delta skew (C-P) for BTC and ETH is at 1.18% and -1.59% respectively
• The futures market witnessed $67.5M worth of liquidations, with short positions representing 50.6% of the total.

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

The ATM IV for both the 7 and 30-day period declined to 35.57% and 38.07% respectively. 7-day contracts have seen a more drastic decrease, closing in on the lowest level in the last 30 days. This reflects the continued quietness in the spot market as BTC has experienced minimal movements since the end of last month.

Both BTC and ETH continue to exhibit a contango term structure with the mark IV experiencing a slight drop uniformly across the different tenors.

Examining the 25 Delta Skew (C-P) on BTC, both the 7-day and 30-day skew have seen a significant decrease towards the neutral zone, reaching 0.76% and 1.44% respectively. This shows the implied uncertainties in the market towards BTC, as traders relatively equally favor call and put options. Interestingly, ETH has also experienced a significant drop but more toward the negative territory, indicating a bearish market sentiment instead.

During the previous trading session, @Paradigm reported top BTC trades that align with the market sentiments of uncertainties as the top trades include the purchase of 356x 29-Sep-23 24000 Put, the sale of 290x 28-Jul-23 33000 Call, and the purchase of 275x 29-Dec-23 45000 Call.

Crypto Technical Analysis

In the daily time frame, BTC dipped by 0.59% but maintained its horizontal range between $30K to $31K. A breakout of the resistance could have a 4.92% upside to $31.8K, while a breakdown of the support could result in a 6.18% decline toward the 50 and 100-day moving averages (MA) at $28.4K.

On the daily chart, ETH has dipped by 0.42% in the past day and is finding support at $1.88K, near the 100-day MA. This dynamic support has served as a robust support zone in March. The potential bullish crossover between the 50-day and 100-day MA is still in reach, indicating a potential positive shift in momentum for ETH.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Daily Readings

TradFi

• U.S. inflation rose just 0.2% in June, less than expected as consumers get a break from price increases.

• US dollar stumbles, drops to more than one-year low as inflation eases in June

• Global public debt hits record $92 trillion, UN report says

• Wellington in talks to invest in Kim Kardashian's Skims at $4 bln valuation-sources

• UK buyers retreat from housing market, further slowdown seen - RICS

• Amazon Prime Day sales rise as deep discounts tempt inflation-hit shoppers

• Bank of Canada hikes rates, says prepared to raise them further

• US SEC scraps contentious pricing proposal in final money market fund reforms

• IMF approves $3 bln bailout for cash-starved Pakistan

• Uniqlo parent's profit seen soaring to a Q3 record on China recovery

• Nvidia deepens bets on AI in drug discovery with Recursion investment

• Bank of England says Britain is coping with higher interest rates

• Japan households' inflation expectations rise, keep pressure on BOJ

• G7 countries sign declaration outlining long-term security guarantees for Ukraine.

• Elon Musk launches his new company, xAI.

Crypto

• Silk Road–Linked Bitcoin Worth $300M Moved by U.S. Government: On-Chain Data.

• Circle Cuts Workforce, Ends Certain 'Non-Core' Activities; Will Continue Hiring Globally.

• Digitex Founder Ordered to Pay $16M to Resolve CFTC Action, Banned From Trading.

• Google Play Changes Policy on Tokenized Digital Assets, Allowing NFTs in Apps and Games.

• Coinbase Adds Messaging Function to Crypto Wallet.

• DeepBook Brings Centralized-Style Orders for Decentralized Finance on Sui Network.

• Crypto Criminals Stealing Much Less Money in 2023: Chainalysis Report.

• Aptos' APT Token Steady After $32M Token Unlock.

• A Second Round of the Lummis-Gillibrand Crypto Bill Elevates CFTC, Defines DeFi.

• Layer-2 Blockchain Starknet's ‘Quantum Leap’ Upgrade Goes Live, for Speedier Transactions.

• Stablecoin Issuers Urged to Anticipate MiCA Rules by EU Banking Agency.

• US senators reintroduce crypto bill aimed at comprehensive regulation.

• Ribbon Proposes to Merge into Aevo, Wind Down $RBN token and Launch New token $AEVO

• Arkham Denies CIA Connection, CEO Shares His $ARKM Holdings Addresses

• FTX Claims Portal Goes Offline After Temporary Opening

Deal Flow

• Binance Labs Invests $15M in Web3 Gaming Startup Xterio.

• Tim Draper's Round Table co-leads $5 million funding round for LunarCrush

• LunarCrush Raised $5 million, Led by Draper Round Table and INCE Capital

• a16z crypto, Snoop Dogg join $20 million Series A funding round for web3 music firm Sound

• Snoop Dogg and a16z Back Web3 Music Platform Sound’s $20M Funding Round.

• Sound.xyz Raised $20M, Led by a16z

• Decentralized Exchange Ambient Raises $6.5M in Seed Round Led by BlockTower Capital

• NFT Lending Protocol Gondi's Developer Florida Street Closes $5.35 Million Seed Round with Dragonfly Involved

• Vanguard Increased Investment in Bitcoin Mining Firms Marathon Digital and Riot, Both Rised over 400% YTD

Yours sincerely,
Treehouse Research 🌳