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- 🟣 Quad-witching day downer
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Welcome back to 0xResearch. Here's what we’ve got for you today:
Options expiry
BTC in Cosmos
DeFi fundamentals
CT: More market musings
Quad-witching day occurs four times a year when stock index futures, stock index options, stock options and single stock futures all expire simultaneously, leading to increased trading volume and market volatility.
This event can cause rapid price movements and a surge in trading activity, especially in the final hour of trading, which, more often than not, is generally in a bearish trend.
Bitcoin spot is of course a 24/7/365 asset, but the CME Futures market, which does close, often offers a cleaner view on market direction. Momentum pressure remains to the downside on all timeframes (i.e. daily, 2D, 5D, weekly).
David Lawant, head of research at FalconX, noted today that “the current market dynamic is characterized by low volatility, soft volumes and orderbooks getting unbalanced when prices start to move to the edges of their range.”
Rallies have been sold into, with the orderbook tending to skew to the sell side.
“This setup suggests a likely flat market in the near-term,” Lawant concludes.
BTC → Nomic → Osmosis
Osmosis DAO has approved a fee-free Bitcoin bridge through a revenue-sharing deal with Nomic, allowing Bitcoin to enter the Cosmos ecosystem via Osmosis. This upgrade will enhance liquidity and align Nomic's revenue with actual usage of its bridged Bitcoin, which previously required the use of its app and a 1% fee charge.
Bitcoin holders can leverage their BTC within DeFi on Osmosis, such as lending, borrowing and staking. The proposal received 95% support from the community.
Osmosis co-founder Sunny Aggarwal highlighted that this proposal sets a new standard for DAO-to-DAO deals with a revenue-sharing model enabled by appchains. The strong support serves as an endorsement of Osmosis' focus on user-friendly solutions, coupled with Nomic’s commitment to secure, decentralized Bitcoin bridging, which was enabled in late 2023.
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DeFi price / revenue trend:
Source: Syncracy via @RyanWatkins_
The current landscape for Ethereum DeFi is promising, despite what the charts may say.
Survivors of last cycles’ DeFi summer are now mature and generating record-high revenues, yet their valuations are at historic lows. That’s the conclusion of Syncracy’s Ryan Watkins, who notes that future upgrades by, for example, Maker and Uniswap, are expected to further boost these revenues.
Macro tailwinds like the spot ether ETFs and softening regulatory environment offer a further positive catalyst for the DeFi sector, although it remains largely at the mercy of crypto’s cyclical market trends.
Examining specific tokens, we see different mechanisms for revenue claims by token holders. Maker (MKR) uses revenue for buybacks and retained earnings, contributing to the surplus buffer, while Lido (LDO) allocates revenue to retained earnings in the insurance fund. Aave (AAVE) retains revenue in the treasury, which supports further development and ecosystem expansion. Uniswap (UNI) has not yet activated its fee switch for token holders, but this could change soon.
One way to track this basket is via Index Coop’s DPI index token.
Maple Finance has unveiled Syrup, a new composable lending product where users can deposit USDC to lend to whitelisted crypto entities and receive competitive yields. Syrup will open deposits on June 25, and run a “drip” incentive program that will be convertible to a token in Q4 2024.
With the spot ETH ETF approval, the institutions are coming. StETH — given its dominance in marketshare, existing liquid market structures and highly desirable properties — is poised for institutions.
Plus, airdrops have a branding problem.
Kraken and CertiK brought their beef to social media after Kraken said researchers exploited $3 million through a bug.
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The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.
