Weak Retail Sales Figures Point To Slowing US Economy; Mysten Labs To Launch $SUI Token With Subscription Mechanism Over Airdrop

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Our Daily View

What We Are Covering Today

• US retail spending declined for the second consecutive month; Merck plans to acquire Prometheus to expand revenue streams (more in Macro & TradFi)
• Conflux to integrate Uniswap and Curve onto its network; Sui to implement subscription mechanism for its token launch (more in DeFi & CeFi)
• Bitcoin transaction activity is growing rapidly and resembling the previous market recovery (more in On-Chain)
• ETH option volume surpassed BTC; Traders continue to chase upside on BTC and ETH (more in Crypto Derivatives)
• BTC sees a reversal pattern from its daily trendline which has led declines in the rest of the market (more in Crypto Technical Analysis)

Macro & TradFi

According to new data released on Friday, US retail sales fell for a second consecutive month in March, indicating that household spending is cooling down as Americans face high inflation and rising borrowing costs. Data from the Commerce Department revealed that the value of overall retail purchases dropped by 1%, with eight out of thirteen retail categories falling last month, led by gasoline stations, general merchandise, and electronics. The report showed that vehicle sales declined by 1.6% in March, while the value of sales at gasoline stations slid by 5.5%, the most since April 2020. Meanwhile, lower sales of autos, electronics, and at-home and garden stores drove retail sales down by 1% in March from February, indicating that consumers are becoming more cautious after a burst of spending in January.

On the other hand, Merck has agreed to acquire Prometheus Biosciences for $10.8 billion, a move that marks the company's expansion into the immune-disease treatment market. According to Merck CEO Robert Davis, the acquisition, scheduled to close in Q3 2023, will provide Merck access to genetic data that can be used in developing future drugs. The global immunology market is estimated to be worth over $40 billion, and other pharmaceutical companies, such as Pfizer and Amgen, have also recently made acquisitions in this space. Merck is looking for new products to add to its pipeline as it faces the loss of patent protection for its top-selling cancer therapy, Keytruda.

Lastly, onto the major US indices’ performances on Friday. the S&P 500, DJIA, and NASDAQ all gone down slightly with a decline of 0.21%, 0.43%, and 0.36%, respectively. 2-year and 10-year Treasury yields have gone further up, with the former currently at 4.114% and the latter at 3.522%.

DeFi & CeFi

• Hundred Finance exploited in a $7M heist
• Sui to launch subscription mechanism for whitelisted contributed instead of airdropping tokens
• Conflux to deploy Uniswap V3 and Curve with its mainnet token CFX bridged to Ethereum mainnet, known as eCFX
• Solana introduces convertible grants and investments for ecosystem development
• Olympus DAO votes to buy more $ETH for its treasury backing OHM tokens
• Bitrue hacked for $23M as the exchange temporarily suspends withdrawals
• Hong Kong Web3Hub fund officially launches
• Ethereum Foundation researcher reveals users IP address is captured upon staking $ETH
• EOS announces the beta launch of EOS EVM mainnet
• Ondo Finance to launch interest-paying stablecoin alternative called OMMF

Major cryptocurrency exchanges OKX, Bybit, and Kucoin have announced that they will list Sui Token on their platforms. Instead of an airdrop, the exchanges will use a token launch subscription mechanism. Ordinary users can participate in a lottery to purchase tokens at a higher price. The sale includes 594 million tokens, with OKX and Kucoin each offering 225 million $SUI tokens priced at $0.1 for the lottery draw. The Sui Foundation is also offering an additional sale exclusively for contributors to the Sui ecosystem who have been approved for a whitelist under the Community Access Program (CAP). The exchanges set aside 144 million $SUI tokens for whitelisted users, with OKX and Kucoin contributing 25 million tokens each, and Bybit offering 94 million tokens priced at $0.03. The Sui development team, Mysten Labs, recently repurchased FTX's equity stake and right to purchase Sui tokens for $96 million.

Conflux has proposed integrating Uniswap v3 and CNH (offshore Chinese Yuan) stable currency onto its network. This move comes after Binance announced its support for Conflux Network's (CFX) mainnet integration. The goal is to establish liquidity pools to facilitate the exchange of CFX tokens and promote incentives that encourage liquidity, thereby increasing the network's worth and usage. By deploying Uniswap v3 on Conflux eSpace, Uniswap community gains access to a wider range of trading opportunities with both USD- and CNHC-based pairs. Conflux is also participating in the Defi ecosystem by offering a liquidity pair with ETH on Curve,. Following an on-chain vote by the Curve DAO, the Curve pool (eCFX-ETH) has been officially approved and added to the Curve Gauge. Furthermore, the pool is now available for staking on Conflux, enabling DeFi users to operate deeper within the Curve ecosystem.

On-Chain

Bitcoin transaction activity is rapidly growing, with over 270k transactions per day and approaching its peak for this market cycle. This surge in transaction count suggests a resurgence in network activity and demand for on-chain transactions, reminiscent of the climb out of the 2018 bear market. The above chart from @glassnode demonstrates this trend, utilizing Entity-Adjustment to filter out non-economic transactions such as internal shuffling and exchange wallet management.

Regarding Ethereum, the recent Shanghai upgrade has proven to be a derisking event. Despite validators now being able to unstake their stake from the ETH 2.0 Deposit Contract after the upgrade, the market has remained confident, with ETH deposits and prices continuing to rise. According to @glassnode, the Total Value Locked in the ETH deposit contract has reached an all-time high of 17,715,431 ETH. Moreover, interest in Liquid Staking Derivatives (LSD) has been on the rise, with top liquid staking projects seeing a growth in ETH deposits.

Crypto Derivatives

• BTC and ETH funding rates remain positive
• 30-day ATM IVs for BTC and ETH rose to 53.85% and 60.44% respectively
• 30-day 25 delta call skew for BTC and ETH falls to 2.03% and 2.18% respectively

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

The futures market experienced $440.98M in liquidations over the past 72 hours, with long shorts accounting for the majority at $304.8M.

In the options market, BTC term structure remains in contango while ETH flattens from as near-term IV dips. ETH skew seemed to trend towards call premium for the whole of last week. As the Friday options expire, ETH put-call open interest ratio fell from 0.44 to 0.41 before recovering back to 0.44 later that day. Variance risk premium stayed constant for BTC sitting at 14.79% while falling to 11.28% for ETH as the near-term 7-day RV spiked to 50.29%.

On the flow side, weekend trading volume remained low. For BTC, majority of the volume came from the 21 Apr contacts with about equal calls and puts while for ETH, volume came primarily from 21 Apr and 5 May contracts. ETH daily option volume surpassed BTC for the first daily period in 2023.

Chasing topside is still the primary theme for both BTC and ETH. Noteworthy trades for BTC include the buying of 529.5 contracts of 29 Sep 45K/60K call spread and 500 contracts of 28 Apr 33K / 30 Jun 35K call calendar. While for ETH, there were 8K contracts of 26 May 1.8K/2.2K call spread being sold (@tradeparadigm).

Finally, the VIX fell to 17.07.

Crypto Technical Analysis

On the TA front, BTC was rejected at the upper trendline last Friday night and have since shown a slight reversal to the downside. Zooming into the 4H timeframe, the immediate support zone is at the $29.7K - $29.8K. However, if price breaks through that level, the next strong support is at $27.6K - $27.8K, representing a roughly 7.5% downside. RSI, on the other hand, has gone down significantly which is currently at 63.9 and 43.0 respectively for 1D and 4H.

Turning to ETH, price movements have largely followed BTC with a slight reversal without hitting key technical levels. If the reversal pattern continues, ETH is likely to test the previous 1D resistance at $1.98K to 2K for a possible rebound. The $2K price level also acts as the key psychological support zone. Unlike BTC, however, RSI for ETH has continued to stay elevated with it currently at 70.9 and 60.7 respectively for 1D and 4H.

Access institutional-grade commentary on TradFi × Crypto markets

By Treehouse Research

Read Past Issues

Daily Readings

TradFi

• At China's largest trade fair, exporters worry about world economy

• Saudi Aramco 4% stake transferred to PIF's Sanabil

• German auto association sees 2023 electric passenger car output up 50%

• Moody's outlook downgrade fuels split reaction in Israel

• Debt ceiling fight shows stakes of Feinstein's Senate absence, Klobuchar says

• Kenya's President Ruto asks opposition to give talks a chance

• Exchanges and asset managers square off over EU market rules

• Japan PM Kishida unhurt in 'smoke bomb' scare, resumes campaigning.

• Washington Commanders owner to sell team for $6 billion, report says.

• US bank deposits rose, loans ticked down in latest week, Fed data show.

• Earnings watch: Netflix, Goldman Sachs headline big week of reports.

• Merck buys Prometheus Biosciences for almost $11bn.

Crypto

• Hundred Finance loses $7 million in Optimism hack.

• Circle exec to join US Congressional committee hearing on stablecoin payments, legislation.

• FTX victims’ lawyers struggle to serve Shaquille O’Neal.

• US Congress to introduce new draft bill for stablecoins.

• Arbitrum proposal to return 700M ARB fails, whale calls it a “power play”.

• Do Kwon lawyers received $7 million before Terra collapse: Report.

• BlockSec launches collaborative testing toolkit for private forked chains.

• Crypto phishing attacks up by 40% in one year: Kaspersky.

• Celsius reportedly prepping litigation against creditor for leaking internal info.

• Individual behind $3.4B Silk Road Bitcoin theft sentenced to one year in prison.

• Less than 1% of staked ETH estimated to be sold after Shapella: Finance Redefined.

• MetaMask third-party provider hacked, exposing email addresses.

• Chia Network says it submitted IPO registration to SEC after leadership shuffle.

• Olympus DAO Votes to Buy More ETH for Treasury Backing OHM Token.

• Crypto Exchange Bitrue Drained of $23M in Hack of Ether, Shiba Inu, Other Tokens.

Deal Flow

• Shaquille O'Neal finally served in FTX class action after three-month chase

Yours sincerely,
Treehouse Research 🌳