🚨 In Case You Missed It

Limit Break raises $200 million over two investment rounds to build Web3 MMO games. Investors include Paradigm, FTX, Coinbase and others.
Singapore‘s central bank considers tighter crypto regulations to discourage retail investors from trading cryptocurrencies.
CME Group announces the launch of Euro-denominated BTC and ETH futures.
Eminem and Snoop Dogg perform at the MTV Video Music Awards, featuring BAYC NFTs. Watch full performance here.

📊 Futures OI Leverage Ratio Continues To Climb

The Futures Open Interest Leverage Ratio for BTC reached its highest level ever recorded at more than 3% of BTC market cap, following the market-wide collapse on August 26th.
The ratio’s all-time high follows hawkish statements from Fed chair Jerome Powell at the Jackson Hole Symposium on August 26th. Since then, BTC is down 7% while ETH is down 9%.
This ratio indicates the amount of leverage that exists within a market, relative to the asset’s market cap. The ratio is calculated by dividing the open contract value by the market cap of the asset.
Higher values suggest that open interest is large, relative to the market size. This implies a higher risk of market squeezes, liquidation cascades or deleveraging events. In turn, lower values generally imply a lower risk of such derivatives-led trading activity.
Historically, such deleveraging events have foreshadowed market bottoms in BTC prices. However, this ratio has been on a strong upward trajectory since the market-wide plunge beginning in May-2022.
Will we see a true deleveraging event before we can solidify a market bottom? Or is this just the outcome of higher appetite for leverage in a relatively new market? Time will tell.
For more on the macro environment, Delphi members can read our Delphi Pro report here.

⚡ The Great Decoupling: Perception vs. Reality

The “decoupling” narrative has started to regain traction recently, suggesting crypto has finally broken the shackles that tether it to traditional markets.
There are some valid points to this argument, including the notable dispersion in performance we’ve seen over the last couple of months attributed to crypto assets with positive fundamental catalysts.
However, it’s too early to call this an official decoupling, not because the argument doesn’t have merit, but because we just haven’t seen enough evidence yet.
And prior to the recent market plunge, the revival of risk appetite fueled strong recoveries across most risk assets. This hasn’t been unique to just crypto or just traditional markets: it’s impacted both.
If the crypto rally we witnessed between July and early August was truly a result of newfound catalysts and not macro-driven, we’d expect to see a greater divergence even among higher beta names in both markets.
In our view, it’s quite clear that the crypto market has not decoupled from macro yet. Although it is important to be aware of newfound fundamental catalysts, our focus should primarily be directed at the most pivotal macro factors which dictate market direction.
We have covered many of these factors in prior reports – most notably Liquidity Runs The World and the Monthly Chartbook from July – some of the critical factors being:
- Liquidity, liquidity, liquidity. Everyone’s focus is on a Fed rate pivot, but global liquidity trends are even more important for asset prices. We’ve highlighted how the year-over-year change in total crypto market cap has been heavily correlated with the change in global M2 (which is a major part – but not the only component – of global liquidity).
- Dollar strength. It’s tough to imagine a scenario where risk assets rally alongside a surging dollar. The DXY broke to a fresh 20-year high this year. After a short consolidation period, it closed at a new yearly high earlier this week, breaking from its July downtrend.
- Tighter central bank conditions and major central bank rhetoric – notably the Fed’s. This may lead to the continuation of restrictive policy to combat generationally high inflation.
For more on the macro environment, Delphi members can read our Delphi Pro report here.

🐣 Notable Tweets

Breaking Down Powell’s Speech at Jackson Hole

My new free article on the Jackson Hole speech and what it means for markets is out.

Enjoy!
👇

— Alf (@MacroAlf) Aug 26, 2022

Arbitrum Following the Nitro Upgrade

gm everybody, @Arbitrum Nitro is upon us, which means a new substack that lays out what to look out for in the ecosystem and how to get prepared.

Featuring multiple protocols in the ecosystem worth keeping your eyes on and underrated tips.

Enjoy!

— Degen Sensei | DeFi Scavenger 🔎 (@DegenSensei) Aug 28, 2022

Airdrops in the zkSync Ecosystem

The zkSync Ecosystem Airdrop Article is now on my medium.

Give me a clap & also follow me on my medium to support my work Frens

Also stay tuned as my Top interesting DeFI protocols (II) is coming soon 😉

Excited for the future of DeFI 🔥

— Permissionlessness.ETH 🦇🔊(@TheDeFISaint) Aug 27, 2022

Get access to complete market coverage, institutional-grade reports, calls with our analysts and access to the Delphi community.