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Treehouse Daily26 Oct 2023

🌳Israel Postpones Gaza Invasion for U.S. Defenses; Mastercard, MoonPay Collaborate on Web3 Loyalty Initiatives

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BTC

ETH

S&P Futures 500

$34,677.25

$1,792.50

$4,185.75

(+1.94%)

 (+0.02%)

(-1.85%)

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

  • Israel delays Gaza invasion; Mike Johnson becomes U.S. House Speaker amid GOP shifts (More in Macro & TradFi)
  • Mastercard partnered with Moonpay to explore Web3 payments; Maestro, the largest Telegram Bot project, experienced a 280 ETH exploit (More in DeFi & CeFi)
  • Major cryptocurrencies surge; new wallets accumulate significant $TRB (More in On-Chain)
  • BTC and ETH return to their contango states with IVs and skews continue to rise (More in Crypto Derivatives)
  • BTC performs a ‘Golden Cross' on the daily chart while ETH forms a bullish pennant on the 4-hour chart (More in Crypto Technical Analysis)

Macro & TradFi

Israel consented to a U.S. request to postpone a potential invasion of Gaza, allowing time for the U.S. to deploy missile defenses in the region, safeguarding American troops from potential threats. This decision reflects considerations around delivering humanitarian aid in Gaza, ongoing diplomatic efforts to release hostages held by Hamas, and U.S. concerns of militant retaliation across the region, including in Iraq, Jordan, Kuwait, Saudi Arabia, Syria, and the UAE. Concurrently, the U.S. has coordinated with Qatar, a mediator with Palestinian militants, and dispatched two Iron Dome missile defense systems to Israel, a THAAD system, and additional Patriot missile defense units to the broader Middle East.

Elsewhere, Mike Johnson, a staunch ally of former President Donald Trump, was unanimously elected Speaker of the House of Representatives by all 220 House Republicans, marking an end to weeks of internal party strife and highlighting a distinct shift to the right within the party's ranks. This election follows the unsuccessful nominations of three other Republicans, after the removal of Kevin McCarthy. Johnson, previously a lesser-known figure and a conservative from Louisiana, has opposed policies like additional U.S. aid to Ukraine and contested the legitimacy of the 2020 presidential election results. His election as Speaker introduces a renewed emphasis on certain legislative matters, including a resolution supporting Israel and addressing the imminent government shutdown.

Yesterday, U.S. stocks declined, with Alphabet's disappointing earnings weighing down. The DJIA, NASDAQ, and S&P 500 fell by -0.32%, -2.47%, and -1.43%, respectively. Alphabet faced its most significant daily drop since March 2020, down 9.51%, due to below-expected cloud revenues, raising concerns about its position in the AI sector. In contrast, Microsoft surged 3.07% on robust Azure cloud business growth and high demand for AI offerings. In other news, The yen weakened to a 33-year low against the dollar, raising the risk of intervention from Japanese authorities. Investors await the U.S. Q3 GDP data release at 20:30 SGT today and the Core PCE Price Index on Friday.

DeFi & CeFi

  • Mastercard partnered with Moonpay to explore Web3 payments
  • Maestro router contract exploited for 280 ETH
  • Polygon deploys the POL token contract on ETH mainnet
  • Bitfinex announces tokenized bond
  • Bank of Spain embraces Digital Euro
  • SBF’s defense team highlights “Inconsistent Statements” by FTX Insiders Gary Wang and Nishad Singh

Mastercard has partnered with MoonPay, a cryptocurrency and NFT payments app, to explore ways that the Web3 space can connect and build loyalty among consumers. This collaboration enables MoonPay to utilize Mastercard's Crypto Credential system to ensure trusted and compliant transactions, while also integrating payments technology like Mastercard Send and Click to Pay. Otherlife, a MoonPay subsidiary, will also play a significant role in this partnership, offering Web3 creative agency services and development. The collaboration seeks to redefine customer loyalty and engagement in the digital economy.

Meanwhile, Maestro, the largest Telegram Bot project, has experienced an external call vulnerability in its Maestro Router 2 contract. Attackers exploited this vulnerability to make off with over 280 ETH. Maestro has taken steps to address the issue, but as a result, tokens in the SushiSwap, ShibaSwap, and ETH PancakeSwap pools will be temporarily inaccessible. 30 minutes into the exploit, the Maestro team stated that the vulnerability had been addressed. The team also ensured that users' wallet credentials remained secure throughout the incident. The team refunded the users within 10 hours by buying back the tokens for the most affected users and providing ETH equivalents for others, costing 610 ETH in total. The Maestro team expressed their commitment to user safety and dedication to making users whole after the incident. They apologized for the error and emphasized their ongoing commitment to user satisfaction.

On-Chain

According to @santiment, major cryptocurrencies—Bitcoin, Ethereum, Cardano, and Dai—have witnessed significant surges, reaching their highest levels in over three months. Within just a week, Bitcoin saw a remarkable 20% increase, while Ethereum's value rose by 14%. Notably, Bitcoin recorded a staggering 14,833 transactions exceeding $100K each, particularly following the June ETF announcement. This heightened activity indicates intensified interest, potential for price fluctuations, and emerging opportunities.

On the other hand, @lookonchain has reported a fresh wallet has once again withdrawn $TRB from Binance, accumulating a total of 58,459 $TRB (valued at $5.5M) within the past 48 hours. Since August 25, 22 new wallets have collectively acquired 1,185,269 $TRB, which amounts to $111.4M or 46.7% of the total supply, all purchased at an average price of $42. Impressively, these wallets now sit on an unrealized profit of $61.5M at current prices. This trend underscores strong confidence in $TRB, and highlighting a pattern of accumulation in the market.

Crypto Derivatives

  • Funding rates remained positive for BTC and ETH. 
  • Deribit Implied Volatility Index (DVOL) for both BTC and ETH rose to 58.44% and 49.59%, respectively.
  • 30-day 25-delta skew (C-P) for BTC and ETH rose to 5.07% and 5.93%, respectively.
  • The futures market witnessed $130.31M worth of liquidations since Friday, with shorts representing 53.27% of the total.

Top 3 USDT Perpetual Funding Rate Arbitrage Opportunities

Net Annualized APR

Perp (USDT pair)

Long on

Short On

31.47%

DOGE

Binance

dYdX

18.97%

BTC

Bybit

dYdX

14.34%

LTC

Bybit

OKX

Source: @CexyArbBot Telegram Bot

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.


In the past 24 hours, BTC's implied volatility (IV) has experienced a minor uptick, with the 7-day IV rising from 52.91% to 55.51% and the 30-day IV increasing from 51.26% to 55.06%, as expectations for short-term volatility persist.

Concerning the term structures, BTC's term structure has reverted to a contango state, with near-dated IVs returning to the normal range. Notably, further-dated IVs have also displayed a significant increase, ranging from 2% to 4%, signifying expectations of higher volatilities in the medium to long term. As for ETH, it has generally followed a similar trend by returning to a contango state, albeit with a kink in the curve. Specifically, contracts with 2 to 8 days of expiry have exhibited higher IVs compared to the rest of the curve, possibly due to traders speculating that the positive sentiments around BTC will extend to ETH in the coming days.

The 7-day 25-delta (call-put) skews have also risen once more. In particular, BTC's 7-day skew has increased to 8.24%, reaching its highest point in the last 30 days, surpassing even the levels observed on the day of BlackRock's DTCC ETF listing. The 30-day skew, however, has only seen a moderate increase, reaching levels similar to the previous 30-day high.

Lastly, during US trading hours, @Paradigm reported a continuation of the bullish sentiment, with options traders capitalizing on in-the-money positions. Noteworthy trades included the sale of a 1,025x 29-DEC-23 33000/40000 BTC Call Spread and the purchase of 1,000x 29-Dec-23 40000 BTC Call.

Crypto Technical Analysis

On the daily chart, BTC displays a clear bullish momentum, hovering around a significant price level after decisively breaking through the resistance range of 30k to 31k. Further bolstering this bullish sentiment, Adding to the optimistic outlook is the formation of a 'golden cross', a revered indicator suggesting potential short-term bullishness. Historically, the resistance encountered in May 2022 marked a pronounced bearish engulfing candle, indicating that this level could serve as a formidable resistance point, possibly ushering in downward momentum, which warrants the importance of traders monitoring potential shifts in BTC's trajectory.


On the 4-hourly timeframe, ETH has formed a bullish pennant, a classic continuation pattern after breaching the support level in the $1.5K to $1.6K range, which may suggest a potential breakout to the upside. Adding to the intrigue, there's a looming immediate resistance between $1.82K to $1.84K.  If Ethereum successfully breaks this resistance, it could pave the way for further upward momentum towards the $1.9K ~ $2K range, representing a potential 5-10% upside.

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