Ominous Cloud Veils The Path Ahead

The Castle Chronicle: Volume 18

Author

Atomist
May 25, 2023 • Est. Reading Time: 18 minutes

The financial landscape stands at a critical juncture, its path uncertain and wavering.

Yet, amidst this backdrop of uncertainty, lies a realm brimming with boundless potential. Again and again, on-chain there proves to be a myriad of untapped opportunities.

See for yourself 👇️ 

 👀 What’s to Come in Volume 18

🔑 Key News: Tether investing in Bitcoin, Visa experimenting with Account Abstraction, GMX v2 testnet & more from CJ

🔥 Hot Narratives: GMD on Arbitrum and Yayo coming to Ethereum

📈 Macro Outlook: Simplified Macro Round-up and Implications from Hansolar

📉 HTF Price Action Scenarios from Vlad

⛓ On-Chain Sleuthing Blocktower selling GMX, Smart Money interest in GMD and GHA, and popular farms from Cl & Amir Ormu

⚔️ A Call to Arms

Think you have what it takes to enter the Castle and contribute to funding and advising projects across the space?

🔑 Key News

Major Headlines

  • European Union Passes Law Requiring Identification for All Crypto Transactions

  • European tax directive requires reporting on all crypto asset transfers

  • Blockfi looking to liquidate lending business

  • Ledger released a new update for Nano X that allows social recovery of your seed phrase but after alot of controversy, they decided to delay the upgrade

  • Tether investing 15% of profits into BTC

  • Circle Moves $8.7B to Repo Agreements to Protect Reserves From U.S. Government Default

  • SEC believes that Filecoin is a security

  • VoyagerUCC customers to get 35% of funds back latest by June 1

  • Texas Senate Passes Proof-of-Reserves Bill

  • Malaysia SC takes action against Huobi Global

  • Hotbit shutting down

Exploits/Updates that happened this week

  • Libra-related Sui blockchain fixes critical bug that put ‘billions’ at risk

  • Swaprum rugged for $3M

  • Aave upgrade causes $110M stuck on Polygon but proposal to fix is in place

  • TornadoCash governance exploited but exploiter submits proposal to undo attack

  • LunaFi_Project exploited

Adoption is not stopping!

  • e-HKD Pilot Programme live

  • Visa testing payment system with account abstraction

  • MultiversX partners with Opera Browser

  • Robert F. Kennedy Jr. accepts BTC campaign donations

  • China’s BSN builds blockchain systems on its own terms — with no crypto and Xi’s guiding hand

  • Hong Kong Lets Retail Investors Trade Crypto in New Rules

  • Tether integrated onto Strike

Weekly Defi Updates

Some interesting projects to look out for

Courtesy of CJ - check out his telegram channel for daily news, projects updates and new releases

🔥 Hot Narratives

GMD Ecosystem on Fire

GMD Protocol, a yield-optimizing platform on Arbitrum, and its newly created ecosystem have been back on our radar this week. The protocol abstracts assets from GLP and other applications to form pseudo-delta neutral strategies for base assets.

Its first ecosystem launch (from its own launchpad), GND, was created not long ago, producing a yield-bearing stablecoin, gmUSD. Its yield was sourced from gmdUSDC (GMD) and gDAI (GNS).

Then this week, a new launch Ghast Protocol was finally let loose with some very healthy price action right out of the gates. Ghast (GHA) is a lending protocol enabling leverage built on top of the GMD ecosystem. Small Cap Scientist even began accumulating and threading this week…

GMD has been on a tear since, more so because another anticipated project is being launched on their platform on Monday 29th of May called EtherWars. It describes itself as a risk-to-earn, PvP game.

Information on the public sale can be found here on their medium.

Remilia Continues to Dominate NFTs

Yayo, a Remilia project on Canto, has caused quite the storm over on the budding L1. They recently passed a floor price of 10,000 CANTO dominating pretty much all activity on the chain.

Yesterday, the long-awaited bridge was launched to bring these puppies over to Ethereum.

New crypto regulations in Hong Kong

China has been famous for its hostile stance towards crypto. Over the past few years the phrase “Load the China FUD” has become notorious within our space. However, this stance seems to be changing as Hong Kong announced new crypto regulations reopening trading for retail.

Given Hong Kong's strong connections with Mainland China, experts speculate that these newly introduced rules could potentially be used as a testing ground for implementing comparable regulations and controls on cryptocurrencies in other Chinese-administered regions.

💹 Macro Outlook

Previous Macro Events

  • 3/17 BTFP Starts 👉 SPX, Gold, Crypto rally

  • 3/22 08:00 FOMC : 0.25% 👉 SPX & crypto fell, but gold rose and bond yields fell

  • 3/31 12:30 PCE Inflation : A 0.3% F 0.4% P 0.5% 👉 SPX & crypto rally on softer print

  • 4/12 12:30 CPI(MoM) : A 0.1% F 0.2% P 0.4% Core CPI A 0.5% F 0.4% P 0.5%

  • 4/12 18:00 FOMC Minutes : Admission of light recession towards eoy

  • 4/13 PPI : A -0.5% F 0.1% P 0.0% 👉 Large fall leads to risk-on rally

  • 4/20 UK 👉 10.1% inflation numbers sparks sell off

  • 4/28 Core PCE, Personal Income/Spending : A 0.3% F 0.3% P 0.3%

  • 5/3 23:00 JOLTs Job Openings : A 9.59m F 9.68m P 9.93m

  • 5/4 03:00 FOMC : A 5.25% F 5.25% P 5% 👉 SPX sell off BTC and GOLD up

  • 5/5 12:30 Nonfarm payrolls A 253k F 180k P 165k | Unemployment Rate : A 3.4% F 3.6% P 3.5% 👉 SPX up Gold and BTC down

  • 5/10 12:30 Inflation Rate MoM : A 0.4% F 0.4% P 0.1% YoY : F 4.9% F 5% P 5% 👉 whipsaws

  • 5/11 12:30 PPI : A 0.2% F 0.3% P -0.5% 👉 No large changes

Upcoming Macro Events

  • 5/24 18:00 FOMC Minutes

  • 5/26 12:30 Core PCE Price Index, Durable Goods Orders, Personal Spending/Income

  • 5/31 14:00 JOLTS Jobs Openings

  • 6/1 14:00 ISM Manu PMI

  • 6/2 12:30 Unemployment Rate

BTC, ETH and Macro

BTC has been hanging on to the neckline of the recent two-month range as volatility is falling whilst Binance open interest has been rising. This will usually result in an explosive expansion when the direction is decided.

Fed Talk Week

  • Previous week was a with plenty of talk from Fed officials. Initially some Fed members including Bowman and Jefferson were in favor of further hikes. This led to implied probabilities of a June hike to rise to 36%. However Powell calmed markets with a more neutral tone bringing down probabilities to 25%.

  • Inflation data on Friday the 26th may change the chances of a hike. Currently MoM PCE was previously 0.3% and is forecasted to be 0.3%.

Confused about what’s going on in macro Read this thread👇

The macroeconomic thread below covers earnings, employment, credit environment, debt ceiling issue, effects on net liquidity, effects of rate cuts, and the YCC scenario when all else fails.

Crypto Options Markets

  • Volatility continues to stay extremely low. Previously they were this low in January this year, and it started this year’s ‘echo-bubble’. Remember volatility expansions can mean prices can go either way.

  • Large expiry this Friday(end-of-month ones are usually larger). Next few days, the price could be pinned until afterward.

Courtesy of Hansolar - check out his telegram chat for all things options, crypto and DeFi

📈 HTF Price Action Scenarios

Gm frens!

What a boring week it has been. Volatility is extremely low for ETH and therefore the analysis remains exactly the same from last week.

Price continues to consolidate at the daily low and forms prolonged sideways price action. My plan, therefore, is to wait for an LTF bullish range to form and trade the new demand zones.

For that purpose, I will be using the 4H, as the waves make the most sense to me.

It’s important to keep in mind that the market will do whatever it wants to and we just play the probability game. Given the HTF bullishness, I lean towards bullish setups, but we first need some presented. Therefore it’s a waiting game now. Price could easily continue re-accumulating towards the daily demand zone before showing any signs of bullishness on the lower timeframes.

That’s all for this week. Hopefully, we see some volatility come in so that we have a new structure to work with. See y’all next time

Courtesy of Vlad - trend-based trader and MentFX student

⛓ On-Chain Sleuthing

XM92 keeps buying GBC (GMX Blueberry Club)

XM92 the $GBC leader has been aggressively buying some blueberry NFT at floor price in the last few days... Maybe something big is coming for the leading NFT collection on Arbitrum?

Blocktower selling esGMX OTC

Blocktower selling his esGMX bag OTC. The hedge funds seem to have sold 28k esGMX against a 10k GMX liquid bag.

Transaction can be found here.

We were able to be notified of this thanks to SniperMonke’s discord tool.

Jared Grey 🏇 holds Kanpai Panda’s

Our team recently discovered that Jared Grey, the Sushi lead, is holding a bag of Kanpai Pandas. He holds 3 of those NFTs.

CyberPrince deletes socials and sells Remilia NFTs

Cyberprince, the notorious Remilia bull, has sold ALL of his Remilio babies and deleted his Twitter account. His motives are unclear, but his actions stirred some drama in the Remilia community. He still holds his Yayo NFTs.

Smart Money Moves - Tokens

  • This week, the meme coin category has gained significant popularity among Smart Money, particularly with regard to active participation in their presales.

  • Notably, Smart Money has shown a keen interest in the $GMD token, indicating a strong presence and positive sentiment towards this token and also its ecosystem.

  • Another token that has attracted significant attention from Smart Money is $GHA, a GMD launchpad token, which has experienced notable price appreciation fueled by the enthusiastic speculation of $GND missoooors.

Smart Money Moves - Yield Farms

  • Chronos continues to be a popular choice among smart farmers, with many engaging in yield farming on it for nearly a month. The volatile pools have garnered significant interest, and recently, the stable pools have also become appealing.

  • The Granary has been attracting Smart Farmers since the start of $GRAIN emissions.

  • Hermes Protocol's Volatile Pools have consistently maintained their popularity among smart farmers for an extended duration, and their appeal remains unwavering.

  • The recent attention of smart farmers has shifted towards the (ARB-ETH CMLP) on Pendle. It is worth noting that the APR depends on the value of your vePENDLE.

  • Asymetrix remains a favored option for farming stETH among Smart Farmers, offering them attractive opportunities.

  • Tarot's Volatile Pools continue to be well-liked by smart farmers, signifying their trust in this platform.

  • In the recent week, Level Finance LLPs have gained popularity among smart farmers as well.

  • Velodrome Pools remain favored by Smart Farmers, offering them a reliable and rewarding farming experience.

  • Ramses Volatile Pools maintain their popularity among Smart Farmers, providing them with attractive opportunities.

Smart Money Moves - NFT

Smart Money continues to favor Milady derivatives, as frequent minting and flipping activities on these collections have been observed among Smart Money.

Research and analysis by Cl & Amir Ormu

Thanks for reading, please give us a follow at Castle Capital and subscribe to The Castle Chronicle for an update each week!

Virtually yours,

Atomist & The Castle

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