BTC Leading The Way, Polygon Transactions Drop

OCT 11, 2021 • 4 Min Read

Jeremy Ong + 1 other

Disclosure: Delphi Ventures and members of our team are invested in BTC, ETH and MATIC. These statements are intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token. This content is for informational purposes only and you should not make decisions based solely on it. This is not investment advice.

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Market Update

Besides a market sell of $40m worth of BTC on Bitstamp leading to a market-wide pullback yesterday, the weekend was rather uneventful, with a handful of altcoins outperforming BTC. Thankfully, this event only served as a temporary setback. Bitcoin swiftly recovered and continues exuding significant strength, relative to most of the digital assets market.

BTC Dominance Rises Alongside Total Crypto Cap
  • It’s officially Bitcoin season. In the last 24 hours, only 4 crypto assets in the CoinGecko top 100 have managed to outperform Bitcoin’s immense strength. In the last 7 days, only 12 crypto assets outperformed BTC.
  • Speculators that got caught up in the L1 + liquidity mining war were likely outperformed by BTC over the last week as BTC Dominance continues its rise and more capital rotates back in.

BTC Gets A Lot More Attention
  • To further reinforce BTC’s dominance in the current market, let us compare futures data for BTC and ETH. ETH and BTC OI have been mirroring each other from July until End of September. This changed in early October when a clear divergence between the two emerged (and is widening over the last 10 days).
  • BTC OI is still 30% away from May highs, suggesting that markets have yet to reach a state of euphoria & FOMO. This big difference in BTC & ETH OI suggests that speculators are anticipating more upside in BTC as compared to ETH. As BTC’s ETF narrative strengthens, it’s likely that ETH and the alt L1 narrative will take a backseat at least for the near future.

Crypto Margined Futures Continue Trending Downwards
  • Since May 2021, crypto-margined futures have been on a multi-month downtrend as cash-margined futures gain a significant share of futures OI. One of the main implications of this is reduced directional convexity.
  • This is most easily seen in downside scenarios. If a trader uses crypto to collateralize their long positions and the market turns against them, the value of their open position falls alongside the value of their collateral.
  • You also have the upside scenario where: In an upside scenario, with crypto collateralized positions as the market goes up you become less levered (as the value of the collateral is increasing) and you can give room to “long your longs.”
Polygon Raises Min Gas
  • On Saturday, Polygon’s made a decision to push a client update to increase min gas to fight spam and improve network health. While this may seem like a top-down decision, in reality, it is completely up to Polygon PoS validators to decide whether to adopt this update.
  • That being said, the nodes that the Polygon team is operating have already been running these settings since 5 days ago. Average gas has spiked and is consistently above 50+ Gwei since then and the increased fees have likely caused daily tx count to fall substantially.

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Jeremy Ong + 1 other