September 29, 2021: Waiting for the Next Catalyst

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Is this the calm before the storm? It definitely feels like the markets are in a state of lethargy, waiting for a new catalyst to set the next trend. There are several factors responsible for the current uncertainty:

  • The still-unfolding Evergrande crisis.
  • The stalemate in US congress and the looming debt crisis.
  • The anti-crypto infrastructure bill set to be voted on this Thursday.  
  • The fear of imminent SEC enforcement actions as well as proposed stablecoin regulation.

You can see, the list of items leading to fear in the markets is long. On the other hand, there are not many "acute" positive catalysts that could turn the markets bullish in the short-term – without (at least some of) the FUD elements being resolved. 

While we expect most if not all of the fear-causing factors to pass by sooner or later, we need to be patient at this point in time. 

These "dull" periods in fact provide fertile ground for crypto projects who now get more "quiet" time to put their heads down and build. Just because prices are not shooting up in the short-term, Ethereum researchers won't stop until ETH 2 is shipped, L1s will keep innovating and particularly in the NFT gaming space we will soon see the fruits of months and years of development!

If nothing else, now is a great time to keep up to date on new projects and important innovations as well as accumulate your favourite projects.

"Double Bubble" Hopium

  • Some hopium during uncertain times: The longer a consolidation period lasts, the more explosive the following price movement generally turns out to be. This would also hold true if we were to experience a “double bubble” bull market – with last January’s and February’s run-up only being the warm-up… 
  • Of course, in order for this to happen the market structure will have to change in the coming weeks and months, but the crypto markets have proven time and time again, that they can switch from choppy consolidation to bull market in the blink of an eye.

Some Good News at the Regulation Front

  • While everyone fears harsh enforcement actions by the SEC and new hostile crypto legislation, common sense is still present at another regulatory body, the CFTC.

Polygon and L2s Are Ripping

  • Adding to yesterday’s coverage of Polygon’s explosive user growth, we now see Polygon usurping Ethereum in the number of active addresses! More importantly, Polygon’s growth trajectory is looking far brighter than Ethereum’s, which seems to be stagnating.
  • However, don’t forget that Arbitrum and Optimism, two ETH-native L2s, are also growing rapidly. They absorb a lot of user growth – which to be fair has to be counted towards the Ethereum ecosystem.
  • The recent growth of L1s and L2s has led to many new exciting yield-farming opportunities – but also created new challenges. While getting assets from Ethereum to other L1s and L2s is generally a fast and straightforward process, moving back to Ethereum quickly (especially from Arbitrum and Optimism) or between different L2s can be overwhelming for newcomers. 
  • Here are two great bridging providers that allow for bridging between L1s (Celer Network’s cBridge) as well as fast L2 withdrawals and bridging between L2s (Hop Protocol).
Pro tip: Since Hop Protocol doesn't have a native token (yet), it might be smart to at least try the bridge in anticipation of a potential retrospective airdrop (this strategy could have netted you $50k+ with dYdX...)
  • Of course, things will only get easier with time...
  • The best solution would of course be a bridge aggregator, a service we will likely see soon.

The World of NFTs

  • Built by the community, Loot now has its own marketplace, enabling both native and OpenSea order trades.
  • Treeverse, the project aiming to be the “RuneScape on the blockchain” is making progress with its Public Alpha recently released. The floor price for a Founders’ Private Plot, the “land” in Treeverse, is currently sitting at 0.78 ETH.
  • Aavegotchi is coming to Ethereum, a long overdue and crucial step for the NFT gaming project.
  • In other NFT news, Ripple announced a fund worth $250 million to support NFT projects building on the XRP Ledger. Only time will tell, where this leads...