🌳 US Retail Sales Show Resilience Amid Economic Pressures; Berachain Achieves Unicorn Status In Its Recent Funding Round

15 Mar 2024, Friday

2:44 AM

🌳 US Retail Sales Show Resilience Amid Economic Pressures; Berachain Achieves Unicorn Status In Its Recent Funding Round

BTC

ETH

S&P Futures 500

$71,974.63

$3,907.11

$5,217.75

(-1.18%)

 (-1.63%)

(-0.37%)

Note: All percentages shown above are referenced to the previous business work day's 09:00 (GMT+8)


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Our Daily View

What We Are Covering Today

  • US retail sales rise amid economic optimism; Biden opposes Nippon Steel's acquisition (More in Macro & TradFi)
  • Berachain achieves unicorn status; Drift Protocol to launch Solana’s first “pre-launch” market (More in DeFi & CeFi)
  • Whales have been accumulating BTC in the past 5 days; Over $20M worth of $BLUR unlocks (More in On-Chain)
  • BTC 25 Delta skews (C-P) entered negative territory for 7-day maturities while the term structure maintains its contango state (More in Crypto Derivatives)
  • BTC and ETH experienced a flash crash followed by a swift recovery (More in Crypto Technical Analysis)

Macro & TradFi

In February, US retail sales experienced a resurgence, marked by a 0.6% increase attributed to higher sales at auto dealerships and petrol service stations, despite the ongoing inflation challenges and elevated borrowing costs impacting consumer spending. This rebound contrasts with January's revised figures with a 1.1% decline in sales, suggesting a slowdown in consumer expenditure as households prioritize essentials over discretionary spending. Concurrently, the labor market's resilience, with a slight decrease in weekly jobless claims to 209,000, supports consumer spending, indicating stability in the economic landscape. The Federal Reserve's anticipation of rate cuts by June further underscores a cautiously optimistic outlook for economic growth, with the Atlanta Federal Reserve projecting a 2.5% annualized GDP growth rate for Q1, following a 3.2% growth in the preceding quarter, suggesting no immediate risk of recession.

Elsewhere, President Joe Biden has announced his opposition to the proposed $14.9 billion acquisition of US Steel by Nippon Steel, emphasizing the importance of keeping the American steel company under domestic ownership and operation. This stance is presented as a measure to support American workers, particularly in light of Biden's re-election campaign and the effort to secure the blue-collar vote amidst competition from Donald Trump. Biden's decision could strain relations with Japan, a key ally, as the US seeks to consolidate partnerships with Asia against China's assertiveness. The move reflects Biden's pro-union stance, amid concerns over US Steel's share performance and potential impacts on national security and economic interests. Nippon Steel insists the deal would bolster US competitiveness and strengthen supply chains, especially against China. However, Biden's intervention raises questions about the review process by the Committee on Foreign Investment in the US, possibly necessitating a reassessment to align with the president's opposition. 

Lastly, the US stock market witnessed a downturn yesterday as it reacted negatively to unexpectedly high factory inflation data and disappointing retail sales figures, prompting a rise in Treasury yields. The S&P 500 retreated from its recent record high, dropping by 0.29%. Similarly, the Nasdaq experienced a slight decline of 0.30%, despite outperforming other indices, while the Dow Jones Industrial Average fell by 0.35%. This decline was further exacerbated by U.S. Steel, which saw a significant decrease of 6.39% amid anticipation of President Biden expressing serious concern over Nippon Steel's proposed acquisition of the company. Market participants are now closely monitoring China's impending decision on the 1-year Medium-Term Lending Facility rate, set to be announced today at 09:20 SGT, which could have further implications for global financial markets.

CeFi & DeFi

  • Berachain reaches unicorn status following the recent funding round
  • Drift Protocol announces first “pre-launch” market on Solana
  • L2s become cheaper post “Dencun” update
  • Poll shows Trump is a clear favorite among crypto-owners
  • The Graph expands to over 40 more blockchains

Berachain has successfully reached unicorn status with a valuation of $1.5 billion following a formidable $69 million funding round, co-led by Brevan Howard Digital and Framework Ventures. This marks a significant endorsement from leading venture capital firms and places Berachain among the notable entities in the blockchain space. Berachain stands out with its strategic focus on decentralized finance, operating under the helm of pseudonymous co-founders Smokey The Bera and Dev Bear. The platform aims to enhance the DeFi landscape by ensuring EVM compatibility and fostering a community-driven approach. The platform's native tokens, BERA, BGT, and the Honey stablecoin, are set to play central roles in its ecosystem, although the full operational capacity of these tokens will be unveiled with Berachain's impending launch. Before achieving unicorn status, Berachain's potential was recognized by established backers such as Polychain Capital, Hack VC, and Robot Ventures, securing a strong foundation for the project.

Drift Protocol, the Solana DEX has announced that they will have a "pre-launch market". This space will work similarly to Whales Market, with the initial focus on the upcoming Wormhole token, W. This market aims to provide a clearer mechanism for price discovery, enabling traders to gauge the value of new assets by considering the project's recent valuation and potential premiums. Drift co-founder Cindy Leow highlights the challenges in pricing these nascent tokens, suggesting that an efficient pre-launch market could closely align the starting trade price with its initial listing. To address the inherent risks of a self-referential market that is susceptible to manipulation, Drift is implementing safeguards against extreme price volatility that could trigger a domino effect of liquidations across the protocol. These measures include strict settlement requirements for outstanding debts from other trading products on the platform, particularly those involving leveraged positions. Drift's approach is to ensure the creation of a fair and liquid market, despite the acknowledged challenges, and the exchange has managed to secure commitments from market makers to support these contracts.

On-Chain

Based on an analysis by Santiment, the past five weeks have been marked by a pronounced accumulation trend, particularly among BTC whales. On-chain data reveals that wallets holding between 10 to 10,000 BTC have collectively increased their holdings by approximately 154.16K BTC, a significant 0.665% of Bitcoin's total circulating supply, underscoring a concentrated growth in ownership by these influential entities. The aggregate value of Bitcoin held in these wallets has witnessed a substantial uptick, amounting to over $10.9 billion in valuation at the current market prices.

The on-chain activity for BLUR is signaling significant movements tied to its distribution schedule. Approximately 33.42 million BLUR, valued at around $22.3 million, has been released from a lockup contract and is slated for distribution via Coinbase. This latest movement is part of an ongoing series of unlocks that began in June 2023, amounting to 616.8 million BLUR ($411M) released thus far. As BLUR enters the second year of its four-year vesting plan, the unlock rate for BLUR tokens has been adjusted to a lower rate, aligning with the project’s long-term distribution strategy.

Crypto Derivatives

  • Funding rates remain positive for both BTC and ETH.
  • Deribit Implied Volatility Index (DVOL) for BTC and ETH decreased to 74.18% and 71.23%, respectively.
  • The 30-day 25-delta skew (C-P) for BTC and ETH decreased to 1.25% and -3.56%, respectively.
  • The futures market witnessed $459.78M in liquidations, with longs representing 72.83%.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

57.08%

DOGE

OKX

dYdX

53.12%

DOGE

OKX

Bybit

44.14%

ADA

OKX

dYdX

Notes:

1) Pairs observed include BTC, ETH, SOL, BNB, XRP, LTC, and DOGE vs. USDT perps. 

2) CEXs observed include Binance, Bybit, OKX & dYdX.

3) Lookback period is 24 hours.


Bitcoin’s 7-day and 30-day ATM Implied Volatility (IV) retraced further to 69.40% and 71.62%, respectively. This declining trend over the short term suggests fewer traders are looking to buy options contracts as Bitcoin’s volatility has been calming down recently.

The term structure of Bitcoin has maintained largely in its contango state, with the curve depicting volatility in short to long-term tenures, indicating heightened interest in option purchases for tenures of up to 196 days. This suggests that traders are focused on the short to long-term trades with key factors such as the persistent nature of elevated inflation and Bitcoin halving looming around the corner affecting their trades.

BTC 25 Delta skews (C-P) experienced a significant decrease quickly with BTC skews decreasing to negative territory at -2.78% for 7-day maturities and 1.26% for 30-day maturities. This wide range between 7-day and 30-day maturities indicates that option investors are bearish on BTC in the short term but maintain a positive sentiment in the slightly longer mid-term. With more purchases of puts over the short term, coupled with US macro data compounding the elevated nature of inflation.

Lastly, during the Asia/EU Trading Session, @Paradigm reported option flows emphasizing strategic call purchases and structured positions. Key BTC trades encompassed the procurement of 200x 26-Apr-24 73k calls bought and 200x 22-Mar-24 74 straddles bought. In ETH, noteworthy movements included 3000x 29-Mar-24 2600/3950 Call spread bought and another 2000x 22-Mar-24 4400 Call bought.

Crypto Technical Analysis

In technical analysis, BTC witnessed a rapid decline yesterday, experiencing a flash crash that drove the price from a peak above $73K to a low of $65.5K within a few hours, marking a substantial 6% drawdown. Following the crash, the price swiftly rebounded, finding support around the previously identified range of $69K to $70K before retracing to previous accumulation levels. Despite the recovery, the Relative Strength Index (RSI) has decreased, currently resting at 53.71, in a neutral position. Looking ahead, the immediate resistance persists at the upper trendline formed by recent higher highs, potentially presenting resistance around the $74K level.

Moving to ETH, its price movements mirrored those of BTC's, experiencing a flash crash followed by a subsequent recovery. Notably, the price bounced back from the previously identified support at the lower trendline formed by recent higher lows, highlighting the significance of this level, which has been tested for the fourth time. Additionally, the RSI has rebounded from its low point, approaching the oversold territory, suggesting a potential bullish reversal in the short term. If this trend materializes, the $4.2K resistance level observed in December 2021 will serve as the immediate resistance zone, offering nearly a 9% potential upside.

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