Optimism

Bitcoin bulls’ run toward $45K could produce tailwinds for UNI, OP, TIA and STX

Bitcoin bulls could make a strong push to get BTC through the $45,000 resistance this week. Will UNI, OP, TIA and STX follow?

The S&P 500 Index (SPX) achieved its highest close of the year last week, and Bitcoin (BTC) also hit a new 52-week high, indicating that risky assets remain strong going into the final few days of the year. 

Some analysts believe Bitcoin is done with its rally in the short term and may roll over. Popular analyst and social media commentator Matthew Hyland cautioned in a post on X (formerly Twitter) that a drop in Bitcoin’s dominance below 51.81% could signal that the uptrend has ended “along with a likely top put in.”

Usually, the first leg of the rally of a new bull market is driven by the leaders, but after a significant move, profit-booking sets in and traders start to look at alternative opportunities. Although Bitcoin has not rolled over, several altcoins have started to move higher, signaling a potential shift in interest.

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3 signs Arbitrum price is poised for a new record high in Q2

Arbitrum is relatively cheap versus its top Ethereum L2 rival, Optimism, which may lead to a rise in ARB price over the next few months.

Arbitrum’s ARB token has emerged as one of the best-performing cryptocurrencies following Ethereum’s long-awaited Shanghai upgrade.

Notably, ARB price gained 4.28% to hit $1.36 on April 13, its highest level in two weeks. This also amounts to 18% gains from its $1.15 low a day prior when the Shanghai upgrade enabled staking withdrawals on Ethereum.

ARB/USDT daily price chart. Source: TradingView

To summarize, Arbitrum is an Ethereum layer-2 (L2) scaling solution that aims to reduce network transaction congestion and transaction fees. As a result, the market typically perceives Ethereum’s growth as a boon for L2 chains.

Here are three reasons why ARB could continue its bull run in Q2 to retest its record high of $1.60.

More utility for ARB

Arbitrum generated $2.5 million in profits in March 2023 via sequencing, according to Messari.

Arbitrum financial performance in 2023. Source: Messari

Notably, sequencer profits represent the difference in fee revenue generated by the L2 chain and the fee expense paid to the base L1 chain — all calculated in Ethereum’s Ether (ETH) token, not ARB.

These profits will eventually go to Arbitrum’s community-managed DAO, ArbitrumDAO, as it grows to become more decentralized in the future.

Sequencers can create maximal extractable value (MEV) by arranging users’ transaction requests — a feature missing from Arbitrum.

However, ArbitrumDAO may end up monetarizing MEV by auctioning off rights to produce blocks once they launch decentralized sequencing, asserted Kunal Goel, a researcher at Messari. This would open up opportunities for ARB as a staking token.

“The DAO will likely enforce ARB staking for sequencers to economically align incentives and to allow for slashing in case of any misbehavior, similar to validators in Proof-of-Stake networks,” noted Goel, adding:

“This will add value to the token as users demand greater security from the protocol.”

Capturing Optimism’s market share

Arbitrum has outperformed its top Ethereum L2 rival, Optimism, on almost all the key metrics throughout most of 2022 and 2023.

For instance, in 2022, Arbitrum generated $22 million in sequencer revenue and $6 million in profits. Meanwhile, Optimism made $18 million and $4 million in sequencer revenue and profits, respectively.

Similarly, the first quarter of 2023 saw Arbitrum outperforming Optimism’s revenue by $4 million in revenue and $3 million in profits.

Arbitrum vs. Optimism key metrics. Source: Messari

Arbitrum also had a higher total value locked (TVL) through most of 2022 and 2023, with its dominance increasing further after the ARB airdrop in March.

As of April 13, Arbitrum’s TVL was $2.27 billion compared with Optimism’s $930 million.

Optimism versus Arbitrum TVL. Source: Defi Llama

“At current market prices, ARB trades at a discount to OP across all valuation multiples,” Goel noted.

ARB price in descending triangle breakout

The ongoing run-up in Arbitrum price has broken above what appears to be a continuation pattern.

Related: ARB price to $2? Ethereum L2 rival Arbitrum will double in April, fractal suggests

Dubbed descending triangle, the pattern develops when the price consolidates between a falling trendline resistance and horizontal support. It resolves after the price breaks out of the range, pursuing the direction of its previous trend.

ARB entered a similar breakout stage on April 13 after rising above its triangle’s upper trendline with convincing volumes. 

ARB/USD four-hour price chart. Source: TradingView

The ARB/USD pair is now on a run up toward $1.60 in Q2, its best level to date, and up 20% from current price levels. This upside target is measured after adding the maximum distance between the triangle’s trendlines to the breakout point.

Conversely, ARB price risks short-term correction due to its overbought relative strength index on the four-hour chart. In this case, the triangle’s upper trendline will be the likely downside target at around $1.20.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Coinbase CEO says Bitcoin Lightning is ‘something we’ll integrate’

“Lightning is great and something we’ll integrate,” Brian Armstrong said in response to an allegation that he was “ignoring” the network.

Bitcoin (BTC) layer 2 scaling solution Lightning may feature on the cryptocurrency exchange Coinbase in some capacity, according to its CEO, Brian Armstrong.

In a tweet on April 8, Armstrong said that “Lightning is great and something we’ll integrate” in response to a tweet criticizing him for “actively ignoring” the network.

Armstrong provided no further details on what a Lightning integration with Coinbase would involve or when it could be expected.

Coinbase, along with Binance and the now bankrupt FTX, has been called out in the past for not integrating the Lightning network which enables faster and cheaper BTC transactions than the Bitcoin base network.

According to a GitHub repository by Lightning enthusiast David Coen, Coinbase would join Bitfinex, Kraken and OKX as the largest trading platforms to have integrated Lightning, if Armstrong stays true to his word.

Coen had previously suggested that Lightning integration may go against the business plan for many of these trading platforms, “since the priority seems to be to integrate as many altcoins as possible and follow the trends of the market.”

Armstrong claims to have tested out a Lightning network application in recent days, and sent Cointelegraph reporter Joseph Hall $100 in BTC after Hall shared a video of himself using Bitcoin in Senegal.

The $100 was a prize by Armstrong for those who shared the “best” examples of how people are using crypto in Africa. Hall said he would give away the funds to onboard others to Bitcoin.

Hall reported, however, that he hasn’t received the payment, prompting Bitcoiner Derek Ross to suggest that Armstrong “needs a lesson on Lightning.”

Coinbase has lately been more active in the Ethereum ecosystem having launched “Base” on Feb 23 — an Ethereum layer 2 application-focused network powered by fellow layer 2 Optimism.

Related: Bitcoin Lightning Network growth is organic, coming from real-world adoption

Interestingly, Armstrong wrote a “Scaling Bitcoin” article in January 2016, where he said that he would throw support behind Bitcoin scaling solutions:

“We also did it to show our support for scaling Bitcoin, and encourage things to move forward, since we’d like to see a solution sooner rather than later.”

Lightning was launched about two years later in March 2018, with last month marking the fifth anniversary of the network.

Cointelegraph contacted Coinbase for comment but did not receive an immediate response.

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

Coinbase wants devs to build inflation-pegged ‘flatcoins’ on its new ‘Base’ network

Coinbase explained that it is now “more important than ever” to build an inflation-tracking stablecoin that negates poor monetary policy decisions of central banks.

Crypto exchange Coinbase sees inflation-pegged “flatcoins” as one of four “critical” innovations that should be built on its recently launched layer-2 network Base.

The other three include an on-chain reputation system, an on-chain limit order book (LOB) exchange, and tools that make the decentralized finance (DeFi) ecosystem safer. 

The trading platform outlined the four areas in a March 24 post — about a month after Coinbase launched Base on Feb. 23. Base is secured by Ethereum and powered by fellow layer-2 network Optimism.

First off the bat was the development of an inflation-pegged flatcoin. In light of the recent banking crisis, Coinbase said it is now “more important than ever” to build an inflation-tracking stablecoin that negates poor monetary policy decisions of central banks:

“[We] are particularly interested in ‘flatcoins’ — stablecoins that track the rate of inflation, enabling users to have stability in purchasing power while also having resiliency from the economic uncertainty caused by the legacy financial system.”

While most stablecoins are pegged to a reference asset such as the U.S. dollar (USD), flatcoins aim to be pegged to the “price of living” by tracking consumer price index and inflation data.

Coinbase added that it is also open to other ideas that “fill the space” between fiat-pegged stablecoins and volatile cryptocurrencies.

The concept has the approval of investor Ray Dalio too, who recently said that he would like to see an “inflation-linked coin” that serves to ensure that consumers can secure their buying power.

“The closest thing to that is an inflation index bond, but if you created a coin that says OK this is buying power that I know I can save in and put my money in over a period of time and transact in anywhere, I think that would be a good coin,” he said.

Coinbase has also urged developers to look into developing an on-chain reputation system, which it says will play a “critical role” in establishing “onchain trust” between users, Coinbase said.

A reputation protocol could implement a credit score or a rank-like system which ensures certain criteria is met before an onchain identity can interact with a decentralized finance (DeFi) application:

“This could look like a FICO or Google page rank type score on ENS names, ratings/reviews for merchants, and other measures that help build trust onchain.”

Ganesh Swami, CEO of blockchain data aggregator Covalent previously told Cointelegraph that this could be achieved by reviewing past transaction data of a particular wallet address on competitor protocols, as the blockchain leaves what he describes as “historical breadcrumbs.”

However, Coinbase said that reputation protocols must ensure user privacy and autonomy is preserved.

In its third area of focus, Coinbase said an on-chain limit order book exchange could serve as a more “advanced exchange” because it can carry out the normal operations of exchange whilst eliminating counterparty risk through self-custody.

Limit orders are used to place an order to buy or sell the stock with a restriction on the maximum (or minimum) price that a user wants to trade at. A limit order book is a list of orders for a given security.

Coinbase believes the LOB exchange would open up a host of new trading opportunities on-chain: Base

By taking this onchain, Coinbase explained that it may offer professional traders and institutions a new trading venue to execute trading strategies that they’re familiar with in the traditional financial system:

“The high throughput of Base opens up significant new opportunities for designing new mechanisms for spot trading, limit orders, options, perpetuals, and more. And, builders can use open source tooling like OP Stack to build L3s that give them even more speed and control, potentially enabling even deeper liquidity, still accessible through L2.”

Related: Coinbase new blockchain seen as ‘massive confidence vote’ for Ethereum

The final area of focus, according to Coinbase, is around making the decentralized finance (DeFi) ecosystem safer for users and developers.

To achieve that feat, it wants to enable tools that protect against smart contract code vulnerabilities and protocol logic errors.

The firm explained that self-service security testing tools and stronger auditor services may help mitigate threat prevention, circuit breakers and incident response systems.

Coinbase said it would also like to see more insurance protocols to serve as a “critical backstop” for users in the event of a smart contract exploit.

Meanwhile, to help fast-track DeFi on Base, Coinbase launched its Base Ecosystem Fund to help fund early-stage projects building on Base. The layer-2 network now supports over 30 blockchains, according to a recent post by Base.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Coinbase wants devs to build inflation-pegged ‘flatcoins’ on its new ‘Base’ network

Coinbase explained that it is now “more important than ever” to build an inflation-tracking stablecoin that negates poor monetary policy decisions of central banks.

Crypto exchange Coinbase sees inflation-pegged “flatcoins” as one of four “critical” innovations that should be built on its recently launched layer-2 network Base.

The other three include an on-chain reputation system, an on-chain limit order book (LOB) exchange and tools that make the decentralized finance (DeFi) ecosystem safer. 

The trading platform outlined the four areas in a post published on March 24, about a month after Coinbase launched Base, a network that is secured by Ethereum and powered by fellow layer-2 network Optimism.

First off the bat was the development of an inflation-pegged flatcoin. In light of the recent banking crisis, Coinbase said it is now “more important than ever” to build an inflation-tracking stablecoin that negates poor monetary policy decisions of central banks:

“[We] are particularly interested in ‘flatcoins’ — stablecoins that track the rate of inflation, enabling users to have stability in purchasing power while also having resiliency from the economic uncertainty caused by the legacy financial system.”

While most stablecoins are pegged to a reference asset such as the U.S. dollar, flatcoins aim to be pegged to the “price of living” by tracking consumer price index and inflation data.

Coinbase added that it is also open to other ideas that “fill the space” between fiat-pegged stablecoins and volatile cryptocurrencies.

The concept has the approval of investor Ray Dalio too, who recently said that he would like to see an “inflation-linked coin” to ensure that consumers can secure their buying power.

“The closest thing to that is an inflation index bond, but if you created a coin that says OK this is buying power that I know I can save in and put my money in over a period of time and transact in anywhere, I think that would be a good coin,” he said.

Coinbase has also urged developers to look into developing an on-chain reputation system, which it says will play a “critical role” in establishing “onchain trust” between users, Coinbase said.

A reputation protocol could implement a credit score or a rank-like system which ensures certain criteria is met before an onchain identity can interact with a decentralized finance (DeFi) application:

“This could look like a FICO or Google page rank type score on ENS names, ratings/reviews for merchants, and other measures that help build trust onchain.”

Ganesh Swami, CEO of blockchain data aggregator Covalent, previously told Cointelegraph that this could be achieved by reviewing past transaction data of a particular wallet address on competitor protocols, as the blockchain leaves what he describes as “historical breadcrumbs.”

However, Coinbase said that reputation protocols must ensure user privacy and autonomy is preserved.

In its third area of focus, Coinbase said an on-chain limit order book exchange could serve as a more “advanced exchange” because it can carry out the normal operations of exchange whilst eliminating counterparty risk through self-custody.

Limit orders are used to place an order to buy or sell the stock with a restriction on the maximum (or minimum) price that a user wants to trade at. A limit order book is a list of orders for a given security.

Coinbase believes the LOB exchange would open up a host of new trading opportunities on-chain: Base

By taking this onchain, Coinbase explained that it may offer professional traders and institutions a new trading venue to execute trading strategies that they’re familiar with in the traditional financial system:

“The high throughput of Base opens up significant new opportunities for designing new mechanisms for spot trading, limit orders, options, perpetuals, and more. And, builders can use open source tooling like OP Stack to build L3s that give them even more speed and control, potentially enabling even deeper liquidity, still accessible through L2.”

Related: Coinbase new blockchain seen as ‘massive confidence vote’ for Ethereum

The final area of focus, according to Coinbase, is around making the decentralized finance (DeFi) ecosystem safer for users and developers.

To achieve that feat, it wants to enable tools that protect against smart contract code vulnerabilities and protocol logic errors.

The firm explained that self-service security testing tools and stronger auditor services may help mitigate threat prevention, circuit breakers and incident response systems.

Coinbase said it would also like to see more insurance protocols to serve as a “critical backstop” for users in the event of a smart contract exploit.

Meanwhile, to help fast-track DeFi on Base, Coinbase launched its Base Ecosystem Fund to help fund early-stage projects building on Base. The layer-2 network now supports over 30 blockchains, according to a recent post by Base.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Derivatives data highlights crypto traders’ positive sentiment and belief in further upside

A 5.5% weekly decline in the total crypto market capitalization might have sucked the wind out of some altcoins, but it has done little to alter traders’ bullish point-of-view.

The recent weakness in the crypto market has not invalidated the six-week-long ascending trend, even after a failed test of the channel’s upper band on Feb. 21. The total crypto market capitalization remains above the psychological $1 trillion mark and, more importantly, cautiously optimistic after a new round of negative remarks from regulators.

Total crypto market cap in USD, 12-hour. Source: TradingView

As displayed above, the ascending channel initiated in mid-January has room for an additional 3.5% correction down to $1.025 trillion market capitalization while still sustaining the bullish formation.

That is excellent news considering the FUD — fear, uncertainty and doubt — brought down by regulators regarding the cryptocurrency industry.

Recent examples of bad news include a United States district court judge ruling that emojis such as the rocket ship, stock chart and money bags infer “a financial return on investment,” according to a recent court filing. On Feb. 22, Judge Victor Marrero ruled against Dapper Labs, refusing to dismiss a complaint alleging that its NBA Top Shot Moments violated security laws by using such emojis to denote profit.

Outside of the U.S., the International Monetary Fund on Feb. 23 issued guidance on how countries should treat crypto assets, strongly advising against giving Bitcoin a legal tender status. The paper stated, “while the supposed potential benefits from crypto assets have yet to materialize, significant risks have emerged.”

IMF directors added that “the widespread adoption of crypto assets could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate fiscal risks.” In short, those policy guidelines created additional FUD that caused investors to rethink their exposure to the cryptocurrency sector.

The 5.5% weekly decline in total market capitalization since Feb. 20 was driven by the 6.3% loss from Bitcoin (BTC) and Ether’s (ETH) 4.6% price decline. Consequently, the correction in altcoins was even more robust, with nine out of the top 80 cryptocurrencies down by 15% or more in 7 days.

Weekly winners and losers among the top 80 coins. Source: Messari

Stacks (STX) gained 53% after the project announced its v2.1 update to strengthen the connection to Bitcoin-native assets and improve its smart contracts’ control.

Optimism (OP) rallied 13% as the protocol released the details of its upcoming superchain network, which focuses on interoperability across blockchains.

Curve (CRV) traded down 21% after an Ethereum security analytics firm suggested verkle tree implementation, which could severely impact Curve Finance’s use on the mainnet, according to its team.

Leverage demand is balanced despite the price correction

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

Perpetual futures accumulated 7-day funding rate on Feb. 27. Source: Coinglass

The seven-day funding rate was marginally positive for Bitcoin and Ethereum, thus a balanced demand between leverage longs (buyers) and shorts (sellers). The only exception was the slightly higher demand for betting against BNB (BNB) price, although it is not significant.

The options put/call ratio remains optimistic

Traders can gauge the market’s overall sentiment by measuring whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, whereas put options are for bearish ones.

A 0.70 put-to-call ratio indicates that put options open interest lags the more bullish calls and is therefore positive. In contrast, a 1.40 indicator favors put options, which can be deemed bearish.

Related: ‘Liquidity’ has most affected Bitcoin’s price in the last year, according to trader Brian Krogsgard

BTC options volume put-to-call ratio. Source: Laevitas

Apart from a brief moment on Feb. 25 when Bitcoin’s price traded down to $22,750, the demand for bullish call options has exceeded the neutral-to-bearish puts since Feb. 14.

The current 0.65 put-to-call volume ratio shows the Bitcoin options market is more strongly populated by neutral-to-bullish strategies, favoring call (buy) options by 58%.

From a derivatives market perspective, bulls are less likely to fear the recent 5.5% decline in total market capitalization. There is little that federal judges or the IMF can do to severely impair investors’ belief that they can benefit from decentralized protocols and cryptocurrencies’ censorship resistance abilities. Ultimately, derivatives markets have shown resilience, paving the way for further upside.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Soaring growth of Ethereum layer-2 networks set to continue in 2023

Leading layer-2 networks on Ethereum have seen a surge in daily active users and fees recently.

Ethereum layer-2 networks have gone through an explosive growth phase over the past couple of months, a trend that is set to continue in 2023.

According to recent data, the leading layer-2 networks have seen an increase in daily active users thathas translated into a growth in fees for the respective ecosystems.

According to analytics provider Token Terminal, Polygon leads the pack with 313,457 daily active users as of Jan. 17, a metric that spiked to over 600,000 daily active users earlier in January.

That’s a 30% increase in activity since the beginning of October, resulting in nearly $55,000 worth of daily fees for Polygon.

Optimism has seen even faster growth, with a 190% gain in daily active users over the past three months. This resulted in daily network fees of $119,475, a gain of almost 140% since the beginning of the year.

Arbitrum One currently has 41,694 daily active users, an increase of around 40% over the past three months. Daily fees on the network are just over $40,000, according to the data.

Meanwhile, L2 ecosystem analytics platform L2beat states that Arbitrum has a market share of 52% in terms of total value locked (TVL), which is currently at $2.55 billion. Aribtrum has seen a 9% increase in TVL over the past week.

Optimism, the second-largest L2 network, has a TVL of $1.46 billion, giving it a market share of 30%. Its collateral locked has surged by 15% over the past seven days.

The two together account for more than 80% of all the collateral locked in layer-2 platforms.

Related: Optimism and Arbitrum flip Ethereum in combined transaction volume

There has been an increase of almost 10% in TVL for all L2s over the past week, pushing the total TVL up to $4.89 billion. However, that figure is still down 34% since its peak in April.

Nevertheless, this decline is less than half of the retreat DeFi TVL has made since its all-time high. DeFi collateral has declined by 75% since December 2021, according to DeFiLlama, suggesting that there is greater demand and momentum for layer-2 networks at the moment.

Total crypto market cap closes in on $1T right as Bitcoin price moves toward $20K

Crypto traders chase after neutral-to-bullish options as Bitcoin price targets $20,000 and the total crypto market cap surges above $900 billion.

The total cryptocurrency market capitalization reached its highest level in over two months on Jan. 13 after breaking above the $900 billion mark on Jan. 12.

While the 15.5% year-to-date gain sounds promising, the level is still 50% below the $1.88 trillion crypto market cap seen before the Terra-Luna ecosystem collapsed in April 2022.

Crypto markets total capitalization, USD. Source: TradingView

“Hopeful skepticism” is probably the best description of most investors’ sentiment at the moment, especially after the recent struggles of recapturing a $1 trillion market capitalization in early November. That rally to $1 trillion was followed by a 27.6% correction in three days and it invalidated any bullish momentum that traders might have expected.

Bitcoin (BTC) has gained 15.7% year-to-date, but a different scenario has emerged for altcoins, with a handful of them gaining 50% or more in the same period. Some investors attribute the rally to the U.S. Consumer Price Index (CPI) data released on Jan. 12, which confirmed the thesis that inflation was continuing to drop.

While the macroeconomic conditions might have improved, the situation for cryptocurrency companies seems gloomy. New York-based Metropolitan Commercial Bank (MCB) announced on Jan. 9 that it would close its crypto-assets vertical, citing changes in the regulatory landscape and recent setbacks in the industry. Crypto-related clients accounted for 6% of the bank’s total deposits.

On Jan. 12, the U.S. Securities and Exchange Commission (SEC) charged cryptocurrency lending firm Genesis Global Capital and crypto exchange Gemini with offering unregistered securities through Gemini’s Earn program.

A final blow came on Jan. 13 after Crypto.com announced a new wave of staff layoffs on Jan. 13, reducing the global workforce by 20%. Other crypto exchanges that recently announced job cuts in the last month include Kraken, Coinbase and Huobi.

Despite the dreadful newsflow, the macroeconomic tailwinds favoring risk assets ensured that only UNUS SED (LEO) closed the first 13 days of 2023 in the red.

Weekly winners and losers among the top 80 coins. Source: Nomics

Lido DAO (LDO) gained 108% as investors expect the upcoming Ethereum Shanghai upgrade that enables staked Ether withdrawals to boost the demand for liquid staking protocols.

Aptos (APT) rallied 98% after some decentralized applications started to pick up volume, including Liquidswap decentralized exchange (DEX), Ditto Finance staking and yield and nonfungible token (NFT) marketplace Topaz Market.

Optimism (OP) gained 70% after the layer-2 network picked up activity and, combined with its competitor Arbiturm, surpassed Ethereum’s main chain transactions.

Leverage demand is balanced between bulls and bears

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

Perpetual futures accumulated 7-day funding rate on Jan. 13. Source: Coinglass

The 7-day funding rate was near zero for Bitcoin and altcoins, meaning the data points to a balanced demand between leverage longs (buyers) and shorts (sellers).

If bears are paying 0.3% per week to maintain their leveraged bets on Solana (SOL) and BNB (BNB), that adds up to a mere 1.2% per month — which is not relevant for most traders.

Related: Bitcoin price rallies to $19K, but analyst says a $17.3K retest could happen next

Traders’ demand for neutral-to-bullish options has spiked

Traders can gauge the market’s overall sentiment by measuring whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, whereas put options are for bearish ones.

A 0.70 put-to-call ratio indicates that put options open interest lag the more bullish calls by 30%, which is bullish. In contrast, a 1.40 indicator favors put options by 40%, which can be deemed bearish.

BTC options volume put-to-call ratio. Source: laevitas.ch

Between Jan. 4 and Jan. 6, the protective put options dominated the space as the indicator soared above 1. The movement eventually faded and the opposite situation emerged as the demand for neutral-to-bullish call options has been in excess since Jan. 7.

The lack of leverage shorts and demand for protective puts points toward a bull trend

Considering the 15.7% gain since the start of 2023, derivatives metrics reflect zero signs of demand from leverage shorts or protective put options. While bulls can celebrate that the $900 billion total market capitalization resistance faced little resistance, derivatives metrics show bears are still patiently waiting for an entry point for their shorts.

Considering the market’s bearish newsflow, the bulls’ main hope remains solely in the framework of a favorable macroeconomic environment, which largely depends on how retail sales data reports next week.

China is also expected to release its economic figures on Jan. 16 and the U.S. will do the same on Jan. 18. Another potential impact on price could be the United Kingdom’s CPI print which is set to be announced on Jan. 18.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Optimism and Arbitrum flip Ethereum in combined transaction volume

The two layer-2 networks processed more than 1.1 million transactions combined on Jan. 10.

Ethereum layer-2 on-chain activity has been increasing to the extent that the leading two networks now process more transaction volume than mainnet Ethereum.

Layer-2 networks Arbitrum and Optimism have seen an increase in transactions over the past three months. Comparatively, aside from a few spikes, transactions on the Ethereum network have declined by around 33% since late October, according to Etherscan.

This has enabled the two L2s combined to flip Ethereum for this metric, according to Dune Analytics data.

The chart shows Ethereum processed over 1.06 million transactions on Jan. 10, whereas Arbitrum and Optimism combined processed over 1.12 million transactions.

Additionally, Optimism has now surpassed Arbitrum in terms of daily transactions following a steady uptrend in activity since September.

Layer-2 ecosystem analytics website L2beat reported all L2 activity in terms of transactions per second (TPS) surpassed that of Ethereum in October, and has remained above it since.

L2 activity in TPS – l2beat.com

On Jan. 10, Ethereum processed an average of around 12 TPS, compared to the L2’s average of nearly 16.5 TPS.

Arbitrum and Optimism combined represent almost 80% of the entire layer-2 ecosystem, according to L2beat.

Arbitrum One remains the market leader in terms of total value locked (TVL) with around $2.34 billion in collateral, giving it a 52.5% market share.

Optimism is in second place with a TVL of $1.28 billion and a 28.6% market share.

Cast your vote now!

According to Nansen researcher Martin Lee, decentralized finance (DeFi) protocols are one of the key drivers of the adoption of the Optimism chain.

Related: Can the Optimism blockchain win the battle of the rollups?

Other layer twos such as zk-rollup StarkNet have also been processing more transactions recently. StarkWare technology also powers other solutions including ImmutableX and dYdX.

In October, it was reported StarkNet was processing more transactions per week than the Bitcoin (BTC) network.

Additionally, Starkscan reports the network is at an all-time high in terms of TVL at $5.2 million.

Crypto stablecoin issuer Circle adds Apple Pay support

The stablecoin issuer said Apple Pay support allows traditional businesses to experience the benefits of crypto settlement while allowing crypto businesses to engage with non-crypto-using customers.

Circle, the issuer of the United States dollar-pegged stablecoin USD Coin (USDC), has added support for Apple Pay — with the intention of bringing the crypto and traditional payment systems closer together.

Circle made the announcement in a Nov. 15 blog post, suggesting it may boost sales for crypto-native businesses as they can facilitate traditional payments from non-crypto-using customers while enabling customers to “buy crypto with Apple Pay on their preferred exchange.”

According to Circle, the addition of Apple Pay support will benefit traditional businesses by allowing them “to shift more retail payments to digital currency.”

Apple Pay is available to “eligible businesses” and claims to enable it is “a simple process.” Meanwhile, customers who checkout with Apple Pay at participating firms will finalize the transaction, as usual, using Apple’s Face ID or Touch ID.

Apple has over 1.8 billion active devices worldwide Apple’s CEO Tim Cook claimed in a Q1 2022 earnings call. Apple Pay is one of the most used digital wallets in the United States behind PayPal, according to reports.

Related: Apple job listings and patents hint at foray into ‘3D mixed-reality world’

USDC has the second largest market cap within the stablecoin market, surpassed only by Tether (USDT), which in the wake of the FTX downfall, stoked fear in investors after it depegged slightly from USD.

In an interview with Cointelegraph, Circle’s vice president of product, Joao Reginatto, mentioned that they envision the future will be a “multichain world” soon after Circle’s announcement on Sept. 28 that they would roll out its stablecoin across Polkadot, Optimism, Near Protocol, Arbitrum and Cosmos blockchains.

Both Tether and Circle have denied having any exposure to FTX and Alameda as contagion from the fallout of one of the former-largest crypto exchanges in the world spreads throughout the industry.