September 28, 2021: Spotting Bullish Divergences

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Red again... that's what we see across the board today. The crypto markets are not alone however: The performance of all risk assets and especially tech stocks has been underwhelming in the last days, mainly caused by the lingering Evergrande crisis and fast-rising bond yields.

While we don't know if the pain in the markets will end today or tomorrow, we can focus on important developments in the space and try to detect divergences between fundamentals and prices.

We Are Still Early

  • Judging from the current user experience in crypto land, we are still extremely early. Or how else is it possible that after years, MetaMask and Ledger still look and work in the same clunky way? This has to and will change if we want to onboard the next wave of crypto users – regular people who are not tech-savvy but could benefit equally from the innovations the crypto space has to offer.
  • Unfortunately, the UX of MetaMask and Ledger, especially using them together, has only deteriorated in the last months… Let's hope this trend reverses soon, or that new wallets can jump into the gap and provide a significantly better user experience.
  • On a brighter note: After Bitfinex accidentally spent 7626 ETH on one single transaction, the miner who received the massive tip has returned the amount. As @Diversify stated:
The blockchain is immutable. But the revolution we are part of is defined by our values as humans. Thank you to the miner of block 13307440 who we can confirm is returning 7626 ETH that were incorrectly paid today as a tx fee.

Polygon: A Sleeping Giant?

  • During bullish times, we often see fundamentals and price rise hand in hand (with price usually overshooting at some point). During times of market-wide uncertainty and price corrections, this correlation can break apart and lead to notable divergences between fundamentals and price.
  • Comparing the chart of active addresses on Polygon with MATIC's price, it seems like we see a clear divergence forming. It's hard to imagine a more bullish chart than that of Polygon's exponentially growing user base.
  • When the markets turn around again, expect MATIC to be one of the fastest movers back to all-time highs and beyond. While we don't know if the bottom is in yet, MATIC's multi-month consolidation pattern seems to suggest an opportune time to DCA in.
Source: Coingecko
  • There are good reasons why so many new users and projects are flocking to Polygon: The great UX, low gas fees, and well-established bridges to the “main hub” Ethereum make Polygon one of the most attractive options. Expect many more projects, especially in the NFT and gaming space, to onboard Polygon in the coming months.