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Treehouse Daily21 Apr 2023

SpaceX Rocket Explodes After An Engine Failure; 1inch Becomes One Of The First Blue Chip Player To Launch On zkSync

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BTC

ETH

S&P Futures 500

$28,311.25

$1,949.75

$4,157.00

(-2.25%)

 (+0.01%)

(-0.31%)

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

GM Treehouser 🌳

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Our Daily View

What We Are Covering Today

  • Elon Musk’s SpaceX rocket blows up shortly after launching, marking this as the third failed landing attempt (more in Macro & TradFi)
  • 1inch expands to zkSync Era, being one of the first blue chip DeFi player to launch on a zkEVM chain; MakerDAO approves $500M USDC transfer to Coinbase Custody to earn an annualized yield of 2.6% (more in DeFi & CeFi)
  • Synthetix volume surges on Optimism Incentive Program (more in On-Chain)
  • BTC sees abnormal spikes in IV and skew; BTC bears in favor to profit from 21 Apr contract (more in Crypto Derivatives)
  • BTC breaks the lower bound and sees further dowside while ETH stayed flat (more in Crypto Technical Analysis)

Macro & TradFi

President Joe Biden plans to sign an executive order in the next few weeks limiting investment in crucial parts of China’s economy by American businesses, particularly in semiconductors, artificial intelligence, and quantum computing. As Beijing has argued, the investment curbs are being imposed on national security grounds rather than to hold back China's technological development. The US is briefing its G-7 partners on the investment curbs for high-tech industries and hopes to get an endorsement at next month’s meeting.

Meanwhile, SpaceX's Starship rocket exploded during an uncrewed test flight in Texas, marking the third failed landing attempt of the rocket prototype. Elon Musk, CEO of SpaceX, said they had learned a lot from the flight and the company could try again in a few months. The rocket failed to separate from the Super Heavy booster rocket and began flying by using its engines. It started to spin around and the flight-termination system was engaged, leading to the rocket's destruction. The Federal Aviation Administration will investigate what happened during the test flight.

Lastly, the major US indices remained flat yesterday with S&P 500, DJIA, and NASDAQ closed at -0.60%, -0.33%, and -0.81%, respectively. 2-year and 10-year Treasury yields have declined, with the former currently at 4.132% and the latter at 3.530%.

DeFi & CeFi

  • Dex aggregator 1inch deploys on zkSync Era
  • Layer1 blockchain Berachain raises $42M in funding round led by Polychain Capital
  • Binance labs invests in seed round of GOMBLE, a South Korean blockchain-based game developer
  • US government to allow majority of Voyage Digital-Binance.US sale to proceed
  • Societe Generale launches euro-pegged stablecoin on Ethereum
  • Crypto hardware wallet Trezor partners with Bitcoin privacy firm zkSNACKs to introduce Bitcoin privacy transaction feature to its Model T device
  • MakerDAO approves opening of real-world asset (RWA) vault for Coinbase Custody, earning 2.6% annual yield on USDC
  • Crypto trading firm Wintermute integrates with CoinRoutes smart-order routing system
  • Blockchain infrastructure provider 0x rolls out new suite of APIs

The 1inch Network has deployed its aggregation and limit order protocols on zkSync Era, a Layer-2 scaling solution for Ethereum. According to Sergej Kunz, the 1inch Network co-founder, deploying on zkSync Era will provide faster and cheaper transactions for users. A total of over 200 projects, including Chainlink, SushiSwap, Uniswap, Aave, Argent, Gnosis, and Curve, had expressed interest in deploying on the blockchain while still in development. Currently, 1inch users can access protocols such as GemSwap, SpaceFi, SyncSwap, Mute, and Maverick on zkSync Era. By porting its protocol to zkSync Era, 1inch becomes one of the biggest-name crypto apps thus far to launch onto a zkEVM, or zero-knowledge Ethereum Virtual Machine.

Elsewhere, MakerDAO has approved opening a real-world asset (RWA) vault for Coinbase Custody and the transfer of up to $500 million in USDC stablecoins. In exchange for the deposit, Coinbase Custody will pay an annual yield of 2.6%, but they are not allowed to lend, reinvest, or use the assets in any other way. The tokens will be kept in cold crypto wallets, as voted by the Maker community. This move is part of Maker's efforts to diversify its reserves and generate more revenue by investing in yield-generating traditional financial assets. The platform has already transferred up to $1.6 billion USDC to Coinbase for this purpose. The funds in cold storage are insured up to the $500 million limit and can be withdrawn from the vault within 24 hours.

On-Chain

The Bitcoin SOPR (Spent Output Profit Ratio) chart above indicates that average BTC transactors are still profiting during the recent market correction. At the same time, top buyers have not been fully shaken out of their position. The SOPR measures the realized profit for all BTC coins moved on-chain and is used to understand the market sentiment, profitability, and losses.

Traders should look out for a negative aSOPR (indicated in red), which suggests that short-term holders are taking losses. This often corresponds to a continued uptrend in the market. A deeply negative SOPR is even better, as it indicates that the correction has exhausted sellers and that accumulation of BTC may start to happen.

According to @defiant, decentralized derivatives exchange Synthetix has experienced a surge in trading volume since launching a 20-week campaign to distribute token rewards. Traders can earn Optimism Tokens during this campaign, which has led to an increase in the average 7-day trading volume on Synthetix from $51M to $115M. Additionally, 7-day average fees have doubled from $45,000 to $90,000, as reported by Dune Analytics. Most of the trading activity occurred on Kwenta, a Synthetix-based exchange specializing in trading perpetual futures. The Synthetix Perps Optimism Trading Incentives program is scheduled to run from April 19 to May 9, 2023.

Crypto Derivatives

  • BTC and ETH funding rates remain positive
  • 30-day ATM IV fell to 52.31% and 55.27% for BTC and ETH respectively
  • 30-day 25 delta call skew for BTC flips to put premium at -1.26% while ETH put skew tightens to -2.70%

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

Net Annualized APR

Perp (USDT pair)

Long on

Short On

26.05%

BNB

OKX

BYBIT

19.70%

DOGE

OKX

DYDX

16.87%

XRP

BINANCE

BYBIT

Source: @CexyArbBot Telegram

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

2) CEX observed include Binance, Bybit, OKX & DYDX

@CexyArbBot allows you to customize CEX, 100+ pairs & lookback periods combo

The futures market saw $143.45M in liquidations over the past 24 hours, with longs accounting for the majority at $112.69M.

In the options market, term structure remains in contango for both BTC and ETH, with IV falling across the curve. In the hourly chart for BTC ATM 7-day IV, it shot up to 74.25% before coming back down. The skew for BTC also showed abnormal behavior during the same period, with the 60 and 90-day skew tightening to above 10s while the 7-day skew dipped to -17.76. This might be due to the lack of buyers to catch the bid. Apart from this abnormal market behavior, the 30-day skew for BTC flipped to put premium at -1.26% as ETH tightened to -2.70%.

On the flow side, traders seemed bullish on BTC for today's end-of-week contract as they piled into the 21 Apr calls. The expectation of a retracement after yesterday's dip might be one reason for this bullishness. However, looking at the open interest for the 21 Apr contract, it seems that the bears are in favor of making a profit if BTC remains at around $28.2K, as the puts are mainly concentrated at the $29K strike price with 1359 contracts and $28.5K strike price with 1425 contracts.

Noteworthy trades include buying downside for BTC with 500 BTC contracts of 28 Apr $27K puts and 670 BTC contracts of 28 Apr $26K puts being bought. On the other hand, ETH continues to see upside buying, with 4K ETH contracts of 30 Jun $2.4K calls and 3K ETH contracts of 26 May $2.4K calls being bought.

Finally, the VIX continues its descent and hits 17.17.

Crypto Technical Analysis

On the TA front, the dip continues for BTC yesterday as it breaks the lower bound of the channel. Moving forward, price is likely to approach the $27.7K to $27.8K support that we have seen since the beginning of the month. RSI, on the other hand, has stayed low with it currently at 27.4 at the 4H timeframe.

On the other hand, ETH has followed a different price trajectory and has remained strong despite BTC's volatility. The price has continued to respect the lower trendline formed by the local higher lows, even after the recent dump. However, as the price moves towards the $2K level, a range-bound market can be expected with large volatility as the market determines the direction of the price. RSI for ETH remains at a low level, currently at 34.3 on the 4H timeframe.

Access institutional-grade commentary on TradFi × Crypto markets

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