US Jobless Claims Drop To Nine-Months Low; BonqDAO Suffers $120M Loss After Oracle Hack

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Our Daily View

What We Are Covering Today

• US tech stock jumps higher; Jobless claims came in lower than expected (more in Macro & TradFi)
• Bonq, a lending protocol, suffers $120M loss in smart contract hack; Rocket Pool community proposes to self-limit its liquid staking growth (more in DeFi & CeFi)
• Flows for BTC and altcoins spike as whales move funds (more in On-Chain)
• ETH put-call ratio continues to rise (more in Crypto Derivatives)
• BTC and ETH find support from the 20-EMA line on the H4 (more in Crypto Technical Analysis)

Macro & TradFi

US tech stocks wrapped up in a blowout higher again - taking major US & European indices higher with them. Correlation didn’t seem to hold for other assets as much, e.g. ETH/BTC underperformed their rolling beta to NASDAQ. Initial jobless claim came in lower than expected (183k actual vs 200k expected) but nothing could halt the bull’s party right now. Asian shares look set to open mixed, with Taiwan stocks likely boosted by semiconductor giant TSMC while Hong Kong’s tech index dragged by overnight weakness in Chinese tech giants’ ADRs.

NASDAQ added 1.32% before rallying almost 4% intraday, while SPX added 0.57% and DOW churned around flat. Meta shares closed up 23% after already hefty pre-market gains following the results; poorer-than-expected earnings/projections from other big techs couldn’t drag things lower either. US Treasury bond yields traded tighter as markets continued to price in a looser Fed; 10-year yield closed 2bps tighter to 3.39%. Meanwhile dollar rallied against all majors except JPY.

DeFi & CeFi

• Ethereum Zhejiang Testnet, now live, Shanghai upgrade will be triggered six days later at epoch 1,350
• Bonq, a lending protocol, suffers $120M loss in smart contract hack
• Synthetix governance body, Spartan Council, approves Synthetix V3 proposal
• Rocket Pool community proposes to self-limit its liquid staking growth
• Everlend Finance, shuts down its platform citing current liquidity crunch in the market
• Uniswap's community passes the proposal of deploying Uniswap V3 on Boba Network
• Binance completes integration of $BUSD on the Optimism Network
• Prime Protocol, a cross-chain margin platform, launches its testnet on Arbitrum
• Optimism foundation proposes to upgrade Optimism mainnet to Bedrock

Bonq reported an Oracle hack. The hacker obtained access to around 110 million $ALBT, raised the price of $ALBT, and minted enormous sums of $BEUR. After swapping $BEUR, the price dropped to virtually nothing, liquidating $ALBT troves. AllianceBlock, the issuer of $ABLT, claims its smart contracts were hacked and limited to the Bonq troves. AllianceBlock Bridge is halted. AllianceBlock will take a snapshot before the attack, mint fresh $ALBT, and airdrop them to afflicted users. Bonq stated additional troves are untouched and the procedure is suspended. The company is developing a way for customers to remove all collateral without returning $BEUR in the troves.

Rocket Pool, an Ethereum liquid staking protocol, has proposed solutions to combat network dominance and staking. Avoiding a single point of failure and restricting Rocket Pool's size ensures Ethereum network safety. Rocket Pool's guidelines include operating in Ethereum's best interest and considering long-term effects. Rocket Pool will restrict its expansion if it harms Ethereum's decentralization and allow its Node Operators to make meaningful choices and exit the system if they aren't satisfied with it. Last year, Lido's community rejected its self-limiting plan. However, votes have so far been cast in support of the self-limiting proposal this time round.

On-Chain

Looking at on-chain, the average dormancy for BTC nose dived to a 1-month low while Net Value Transacted or NVT signal has increased. The two indicators suggest movement of funds of BTC on the network and could signal volatility in the days ahead.

Similarly, other altcoins such as CRV have also seen large transactions. According to @santimentfeed, this has been seen on other protocols such as LRC, DYDX and Aave, which they say also indicates possible volatility in the near future.

Crypto Derivatives

• BTC and ETH funding rates remain positive
• 30-day ATM IV rose to 54.8% and 65.2% for BTC and ETH respectively
• 30-day 25d call skew fell for BTC and ETH to 1.43% and -2.71% respectively

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

For futures, total liquidations in the past 24H amounted to $130.7M, split roughly evenly between long and short liquidation.

On the options front, far-dated IV fell. Term structure remains in backwardation, as near-dated IV spikes up for ETH. Variance risk premium dropped for both BTC and ETH to 10.7% and 9.5% respectively as realized volatility rose. Since last Friday, ETH's open interest put-call ratio has gradually increased, rising from 0.26 to 0.3.

On the flow front, the most popular instrument was the far-dated BTC 30 Jun 2023 40k call options. It was noted by Paradigm that 1k contracts of BTC 24 Feb 2023 26k call options were rolled to 1.5k contracts of BTC 30 Jun 2023 40k call options (@tradeparadigm). The top strategy for BTC was the bear call spread.

Lastly, the VIX rose by 4.81% to 18.73.

Crypto Technical Analysis

For TA, BTC lowered by 1% to $23.5K overnight. Price was trading between the $23.7K - $24.2K range before dipping lower to 20-EMA line on the 4-hourly timeframe. On the H4, RSI has formed a short-term uptrend despite a clear bearish divergence formed since 22-Jan. It remains to be seen if RSI can form higher highs or eventually submit to the bearish pressure. Lower support levels on the $22.8K to $23.1K zone should price pullback.

As for ETH, it has stayed roughly flat, inching 0.12% higher to $1.64K. Similar to BTC, price rejected the $1.67K resistance level but has rebounded off its 20EMA line on the 4-hourly chart.

Looking at the ETHBTC chart, we can see that ETH has been outperforming its counterpart for the past two days. It climbed roughly 2% higher to 0.07 before it got rejected by the 100-EMA line on the 4-hourly. Despite the recent momentum, RSI remains below the neutral level.

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Daily Readings

TradFi

• Dollar climbs as central banks see inflation risks unwind

• Ford posts lower profit, issues downbeat outlook; shares drop

• Qualcomm sees earnings below Street as smartphone market sags

• Starbucks' grande-sized sales drop in China squeezes profits

• RBA to lift rates 25 bps on Feb 7, once more to 3.60% in March: Reuters poll

• U.S. weekly jobless claims drop to nine-month low; productivity gains speed

• Alphabet disappoints on sales as ad business slips after pandemic run-up

• Apple forecasts another drop in revenue, proclaims iPhone production problems over

• ECB hikes rates, promises another 50 bps more in March

• BoE set to lift rates to 14-year high, might hint at next moves

• BOJ's deputy governor warns against watering down inflation target

• Stock futures fall after earnings reports from Apple, Alphabet disappoint investors.

• China's Tencent wants to expand its presence in Singapore — and Chinese tourists are a big reason.

Crypto

• Marathon Digital Sells Mined Bitcoin for First Time to Monetize Recent Rally.

• OpenSea Releases Suite of New Tools for Creator NFT Drops.

• Crypto Market’s Post-Fed Rally Continues as DeFi, Smart Contract Platform Sectors Star.

• Mastercard’s NFT Leader Quits, Mints His Resignation Letter on the Way Out.

• Orion Protocol Loses $3M of Crypto in Trading Pool Exploit.

• Giant Bitcoin 'Taproot Wizard' NFT Minted in Collaboration With Luxor Mining Pool.

• EBay Hiring Multiple Web3 Roles Following NFT Marketplace Acquisition.

• Fiat is in 'jeopardy' but Bitcoin, stablecoins aren't the answer either: Ray Dalio.

• Euro stablecoin launched in Finland, claims to be first approved in the EU.

• Japanese Prime Minister says DAOs and NFTs help support government’s 'Cool Japan' strategy.

• Lack of liquidity mitigated damages to BonqDAO exploit: Report.

• Solana DeFi protocol Everlend shuts down over liquidity issues.

• OlympusDAO Votes To Deposit $77M In MakerDAO

• Aptos Labs Awards $50K Grant for Blockchain in Higher Education

Deal Flow

• KuCoin Labs backs web3 social data portal Port3's $3 million round

Yours sincerely,
Treehouse Research 🌳