📺 ROLLUP: Dip Week | The Rise of Polygon | Erratic Elon

bankless nation it is the third week of may and it is a friday morning that means it's roll up time and this is dip week david dip week david roll up time too are you excited dip week david also all-time high week and dip week all in the same week yeah ether hit his all-time high in the the friday after we recorded the last week of the rollup and then crypto also crashed all in the same week guys we're going to be talking about all of that that's going to be in the market section that's what we do here every

friday morning we try to cram as much of the week that was crypto into your brain where we cover markets releases news takes and we end with what we're excited about except that we don't end there we actually end with the meme of the week so stay tuned for the meme of the week this comes at you every friday all right david before we get in we got to talk about consensus big cryptic conference coming right up people can get their tickets this is the last chance though to get their tickets david you're going to be speaking what are you speaking about ultrasound money on monday still working on my presentation but it's

going to be hot ultrasound money gets its debut at consensus and then i'll also be speaking on a panel about the current state of defy and of course how to live a life without banks so bankless also getting its debut at consensus uh really excited for this particular year of consensus because so many of ethereum things have gone mainstream as we expected them to for years and years but now they are finally here now they have like the front stage at consensus defy nfts so much to talk about really excited to talk about all those things

and listen to the other conversations that are going on ray dalio's going to be there michael saylor's going to be there anyone who's anyone in crypto is going to be there so you should be there awesome yes i'm definitely going to be there and bankless listeners you still have a chance i think two more days from today to get your ticket 20 off with the bankless codes make sure you do that there's a link in the show notes david also this is no longer an opportunity we uh the bankless dow that is issued a uh an awesome shirt and this is based on our april's april fool's day joke where

we said like bankless was getting acquired by wells fargo psych that'll never happen right and anyway the bank livestock created community created this fantastic shirt to come commemorate that it's the first i think in a future apparel line it's all sold out now that was a limited edition sale i think you got one yeah uh from what i've heard hundreds of sales there it went really well yeah so the thing to do guys is next time don't miss out on this go to cryptoculture.substance.com sign up get your email address there

that's where the drops will be dropped so you are first to know i think future drops david might have a set amount and you know sell out might be time limited but it might be also uh number limited like scarcity in one form or another and that is really the through line with bankless apparel is in the non-crypto world the non-cryptoculture world apparel is not scarce and there there is the world of like scarce apparel and just like you know street wear that some people are into uh and we want to emulate that

culture in crypto apparel there is uh uh there is a through line about fixing fast fashion like bad garments that just cost two dollars and you wear them two times and then you never touch them again no we want scarce apparel that you wear for life because it has that premium price tag it doesn't fray it doesn't wear out it's a dope design done with an intent the cool thing about this is that we didn't mass produce these shirts and then sell them we took the orders and now we are making one shirt per unit of demand so there's no excess there's no uh you know environmental uh

issues it's about changing the culture of the world around us using scarcity and scarcity tools uh and also rug pulling the wells fargo logo and making it our own oh that's just exporting crypto culture and that's just the fun part i'm wearing one of these which is ritual bap design only 50 have ever will ever be made really fun guys so get in on that okay david you ready to get in we got to start with markets this week and with markets we have to start with the dip but before we get there let's describe it for folks bitcoin what

happened this week in bitcoin price sir yeah bitcoin fell from 58 000 of the high of the week all the way down to 36 500 or so at the deepest part of the dip which is a level that i don't think anyone saw coming slight rebound up into the low 40 000 range but bitcoin has really been having a tough number of weeks ryan if you uh zoom out all the way until until april uh it's it bitcoin has been in this consolidation period which everyone was

hoping would break out from because it's a bull market you tend to break out in bull markets but no it broke down and it's been having a real tough time uh with you know and just overall in in the news cycles it's the elon has just been pounding it like environmental issues blah blah blah china fudd uh bitcoin having a really tough time lately we're like this is definitely three months low lows it's not quite year-to-date lows but it's getting close man getting really close year-to-date lows um yeah i do think there's a case to be made that the current risk adjusted return

risk profile is really really strong with bitcoin right now like ooh interesting we'll get that back to that too but first let's talk about what happened in ether because that went down as well the price of eth went down after as you said we hit all-time highs so tell us about the highs and then let's go to the lows yeah ether hit an all-time high of 4 390 which wow really really high and it kind of makes sense as like when things are that high like you can it's easier to go in the down direction and that's definitely what happened again no one

really expected this level of downness and that's really the through line of the markets this week is like holy like i kind of thought the the this was the only thing that i can remember of a move like this was black thursday in all of my years of crypto it has never really seemed to move that much that quickly uh and ether went for after after it topped out of its highest four thousand three hundred dollars it came down to three thousand seven hundred dollars it then went down to three thousand five hundred dollars and held there it kind of seemed like it was going to make a nice basing pattern but then the floor just fell out and it went from 3500 all the way down to 2 000. i

know all the way down to 1 800 on some exchanges think about that 4 300 down to 1 800 dollars really quick right 55 drop really quick i've got some hot takes on that but i'll reserve that uh for now let's let's take a look before we get to those takes on the dip it was dip week guys uh you know buy the dip maybe we'll talk about that to you but first let's talk about how the ratio held up this is the ether to bitcoin ratio it's something david we've

been monitoring since the first part of this year when ethe was really gaining on bitcoin how did the ratio hold up last week yeah the ratio peaked out at just over .08 which again really really high and then and and then historically when dips happen the eth btc ratio quote unquote it gets slaughtered consistently every single time you know when bitcoin sneezes if ethereum just gets absolutely wrecked uh and to some degree like the ratio did uh pull back a little bit but

like it's still really strong and that's kind of the in sentiment around crypto twitter right now is the ratio held up between ether and bitcoin which is something to take note of people don't remember but do you know could you remember another time it held up david was 2017 like when we saw this kind of action and like i feel like this is maybe a theme when we get into talking about the dip but like so far dude 2017 2021 feels like a fractal of 2017. it's playing out very similarly definitely 2018 2019 when

bitcoin sneezed uh eth got destroyed that was not the case in 2017 and this is reminding me a bit of 2017. we'll get to that i've been kind of thinking about like the what what it means to go a full cycle and i got into crypto and ethereum after ethereum pumped all the way up from like 10 up to 430 dollars and that was crazy and that's when i started paying attention to it and then after ethereum or ether hit 430 dollars it crashed down to 135

and that's the moment that i got in and i that feels like a this feels like a fractal of that now i know a lot of my friends who have just gotten into ether in this brief moment of time and so like oh a lot of my friends are just now getting into ethereum and you know price is a great marketing tool and it feels like that time when ether ran up to 430 dollars off of this insane floor of like 10 to 20 dollars and then fell down to 130 oh dude that's exactly it look and the numbers are similar too like i remember those days this is why i feel like this is like 2017 right so that was 66 off of

all-time high and i remember that drop david it was like 420 the memes were about 420 eath price 420. and then it all the way to 130 it was like mass panic bull market's over eth was a bubble this whole time the entire platform's like worth nothing like i told you guys all of this talk and it happened very rapidly like in this move it was like in the flash of a day two days all of a sudden 66 drop feels very much like that right now all right dave let's take a look at this chart because i think this really nails at home this is one ugly looking chart or at least

one strange looking chart green candle up spike green candle down spike what are we looking at here yeah this is the weekly chart so each candle is one week for the dollar price and there's a famous line both in markets but especially in crypto uh where you know stairs up or escalator up but elevator down right and so you know markets climb a wall right and so we were all we were all super euphoric when ether hit 4 300 and then just one week later it spikes all the way back down and retraces one two

three four five six seven eight weekly candles are erased in two weeks right and so this is a lesson in a just being in zen about this because like this is going to happen pain comes in markets if you feel pain it's just inevitability and so this is also a lesson in leverage if you were on leverage and you got liquidated i'm sorry that's the pain it's a lesson to be learned if you didn't get liquidated good job um and the the take

here is that you know perhaps as you know crypto becomes more mainstream we always thought the markets were becoming less volatile perhaps as these markets become bigger the volatility actually gets bigger yeah i i still think volatility is going down with a long like over the long term if you like cycle all the way out a little bit but yes absolutely we're not over the volatility days and i actually think volatility is a feature not a bug at some level right like so people are so afraid of volatility but you only have to worry about volatility

if like holders don't have to worry about volatility right like i'm holding yeah traders do beholders don't i like uh the market gets and i feel like the news cycle david gets gets all hung up on crypto's volatility and they think that volatility is like a proxy for risk right but like the fiat markets are a lot less volatile but i think they have a massive like a whole lot more tail risk here in in fiat markets right so it's just a different it's it's it's

almost a more honest market right if you will right like there aren't people tinkering with the dials and so you get this this craziness and of course less liquidity too at these earlier phases but let's talk about everyone's asking what happened right so when something like this happens you get a big drop uh everyone wants to know what was the cause of this so we have to talk about this what was the cause of this here is a trader's perspective this is uh dylan leclair had a great tweet thread about

it let's go through some of these david so first off dylan says bull market corrections on the general of 25 to 30 percent are completely normal and expected this has happened in all previous bull runs that's his first point his second point he talks about elon musk here throwing a molotov cocktail into the mix here also elon musk talking about energy consumption of bitcoin so that's one other possible explanation for it uh

where else does this thread take us in in terms of dylan's explanations for this uh downturn david yeah he looks at some utxo analysis where like who is sending uh bitcoins this is a bitcoin focus trader who is sending bitcoins and at what prices um and he draws the connection that you can uh do this thing called the spent output profit loss ratio i'm not familiar on this metric but the conclusion he comes to is that there was a ton of leverage in the system it's all about leverage and this is where these normal 20 to 30 percent

drawbacks which are healthy turn into violent immediate cascading quick drawbacks and so he goes on on his next tweet ryan uh he he looks at um here's what he says following the 64 000 all-time high the market started to sell off during the sell-offs funding flips negative which means that you are actually uh incentivized um i think this is right correct me if i'm wrong uh listeners i guess uh if when funding flips negative you are actually paid to go long and so each

time traders quickly leverage back up so like bitcoin hit 64 000 it dipped down to 55 000 and people are like there's the dip i'm going to buy it and i'm going to leverage up and so the leverage never got flushed out of this system right underwater longs kept adding to their leverage right every dip they added more to their leverage and at some point the this guy claims that on the next tweet that a bunch of whales saw this opportunistic whale saw this and deposited into exchanges and began relentlessly spot selling knowing that

these uh knowing that how many leveraged traders were going to they were going to forcibly make them underwater and forcibly liquidate them right and so the this uh you know in theory uh wales looked at all how much leverage was in the system and they're like if we dump the market we can buy like discounted bitcoins right uh and so that's the conspiracy is that there was way too much leverage that was identifiable very much like the gme debacle right like people just noticed how much short position there was and so they bought a bunch of dme

and then all of a sudden we had the squeeze this is the same exact thing which is in the inverse right and so now there's a ton of leverage that's flushed out from the system if you get liquidated your leverage goes to zero and that's what happened to a lot of people we had 27 billion dollars of open interest at the uh i believe uh the 64 thousand dollar mark and now we got that cut in more than half the trader finishes by saying this is nothing and should be treated as a huge buying opportunity i i feel like that's a great trader's explanation of what

happened it's just like there's so much leverage in the market downturn caused cascading downturn because of leverage and the leverage was flushed right that has to happen periodically as part of a bull run which is why you've seen this pattern in other bull runs you know what's also interesting david that that's kind of the traders take of why this happened but of course like crypto media and like the narrative side of crypto wants to take two here were i guess a few popular takes i heard for why this happened one router's china

banned bitcoin routers reported that china banned bitcoin um i don't know if you saw this circulating but it was in fact not the case china did not ban bitcoin this i don't know how many times this has happened like more than dozens like honestly a ceremony at this point it's like oh yeah this week yeah it's it's going to happen it's going to happen every three months or so just like clockwork uh elon musk tweets his tweet that tesla

uh was dumping 1.5 billion bitcoin stash of course tesla was not dumping the the bitcoin stash although elon's pretty erratic these days in his tweets about cryptocurrency which we'll get to okay so some people said that was the cause it was elon's fault uh over leverage which we talked about other people said it was tether so tether published a breakdown of its reserves not super cash centric i don't know if you saw that david like uh also very little ceremony is fud we

always get it yes yes also tethers compilations like when you buy a tether you're definitely not buying a dollar in the in the bank account you're buying a lot of other things but it's already yeah plus like treasuries and bonds and all sorts of things anyway separate discussion that was uh a reason given also broader macro economic trends inflation warnings right what was the reason okay maybe that's led like a correlation with with stocks maybe that's led to growing fear and

uncertainty investors are getting skittish you know all of these things are given as explanations but i almost feel like they're they're always like narratives that sort of retrofit the data and i just i'm not convinced by any of them right i just think like in bull markets this sort of thing is going to happen and then people will look back after it happens to be like oh here were the causes very clearly right it doesn't actually have to have a cause it could have been anything that happened i think holistically we can say like oh

yeah all of those things like overall it just made everyone just really down like our hero elon turned against us yeah people are just down about this tether fudd like china yeah gosh maybe it made people pessimistic right holistically not really any one of these things but overall people just like oh there's so much to fight the energy debate is relentless nick carter is getting swarmed uh and then also at the same time we have this these over leveraged traders in wales which really just like lights the dynamite like that i feel like is a more rational

explanation for sure and i i guess i feel like you could swap this set of headlines out with any other set of headlines in a given week or two weeks in crypto and it would be the same thing like the net of this david is i feel like a reckoning was needed a rectangle people needed to get wrecked after this after this bull run like it had to happen and dips happen um i tweeted this out david right so like people are stunned by

the um the drop the sudden drop right right and i get that but like also feel it we feel it we feel it we feel it like but also guys like zoom out right so the prices that you just quoted right ether all the way down to 1800 it was 1800 45 days ago like just 45 days we only lost 45 days at the lowest of the low now ethan's is recovering a bit but like oh my god man like if if you bought 45 days ago

you might have lost anything on eth like let's zoom out a little bit and realize how much this asset class has been growing right rather than focus on the dips like it is true when in doubt zoom out like you have to zoom out uh and realize that we're sitting at a price right now that we were like 30 days ago less than 30 days and as low as low is only 45 days ago from a price perspective um there's a there's a tweet response on on my response that just made the point

that uh david you and i were talking about that the same thing happened in in 2017 from the 420 mark to the 150 mark so dips are going to happen it could have been anything i feel like this was just destined to happen uh at at this point in the cycle yeah and again this feels like the marker of the second half of the bull market that's what it was in 2017 i feel like that's what this is now good take um springtime it's it's funny it kind of happened around the same time in 2017

right um let's go to raleigh paul i thought i thought this was interesting too so raul paul does a chart comparison the first is bitcoin now versus 2013 where he's comparing the two and in white you see current price of bitcoin right in this navy color you see bitcoin price 2010 2017. um the lines kind of line up yeah i mean it can't chaotically line up yeah totally fractally line up mm-hmm um

let's go to 2017. right yep perfect and this is this is exactly what we're just talking about like the dips almost yeah exactly what you you just said like it's seasonality is actually the same the dip amount is pretty similar like i guess this is just the ceremonious halfway through the bear the bull market like whales whales are getting more bullish and they have more resources to liquidate markets who are over leveraged maybe this is maybe this is it i think he uh did uh eath somewhere too

in the thread yeah someone asked him hey dude um here it is yeah or ethno versus btc in 2017. is that what this is yeah you can wow so ether in the bear market 2018 to 2019 was lower than b btc in 2017 and right now it's higher and i feel like that's just a perfect indicator of just like ethereum and ether's narrative was getting just absolutely slaughtered in the bear market and now finally people are starting to figure out and so it goes from underperforming to over performing really quickly that's interesting that is interesting what's

what's he doing so he's doing one for eth uh well that was what we just looked at okay i would love to see like eth now versus in 2017 but i'm sure that's out there anyway like these patterns are all super similar so there's that uh while this chaos was going on of course crypto exchanges went down i think a number of them david i think the record number of them coinbase doesn't help i mean it usually goes down uh finance u.s u.s went down kraken went down gemini went down bitstamp went down that's all the

exchanges that's all of them that's everything didn't go down what didn't go down david d fight didn't go down didn't d5 did not go down ethereum did not go down 99. gas prices went up though guys presented kind of a proxy of going down if you can't afford a gas price is it really is it really up for you um yeah it's a bigger bigger conversation yeah uh did not go down though all right david let's let's talk a little bit more about um what happened in d5 so total locked and defy almost 90 billion dollars and then it

got flushed out too below 60 billion dollars we were almost we were almost celebrating that 100 billion mark and then all the way down um so that's total locked value in d5 how about how did how did defy tokens hold up this week let's see d5 tokens have been doing okay right like uh ave still 460 dollars unit swap 26 dollars um impressive it's pretty impressive as like generally flat i mean they definitely took a hit of course but as far as things go defy tokens didn't really get the run-up that ether got but

also didn't get like the slaughtering that ether got either that's super impressive actually i didn't realize d5 tokens held up uh they did okay this week they did okay d5 did okay let's uh take a look at this and look yeah look at it dpi versus ether again called the bottom last week a little bit uh so roughly ten days ago called the bottom of point one three you did sir eat per dpi we are at the level of 0.161 we almost got up to 0.18 down to 1.161 but yeah east versus dpi bottom

still in pat myself on the back maybe i'll become a trader you know that's actually impressive david because i actually would have would have predicted that um a dpi would have gotten slaughtered uh relative to ethe in this in this and that didn't happen so maybe that bottom will hold sir um i think so i like this i like this chart too this is from this is good alternative i mean it's the fear and greed index right i think they measure this based on various social media sentiment other sentiment scores but right now

we are on the extreme fear side of the spectrum i think the other side of this spectrum is like you know jubilance exuberance rational exuberance right we are now tokens are going bajillion x's yeah last week and then also eth maxis are gloating about the ratio yeah yeah exactly wait wait who does that no one does that no one does no one does that no one but but let's say hypothetically they did gloat about the ratio they would do that in the exuberant phase they would not do that in the extreme fear phase and now we are in extreme fear phase i'm

reminded of this warren buffett quote where he says be greedy when others are fearful and be fearful when others are greedy right like so what are we working on when you dial into the extreme fear phase when we're over there that's when you got to be greedy right right when we're in exuberance that's when you feel like like your lizard brain tells you it's like oh my god it's going up it won't stop going up i gotta leverage i gotta leverage i gotta get more worse right that's worse when you lever lever up to even get like increase those gains um

that's when you should be fearful like you should look around and be scared um but right now we've swung into the extreme fear and i think that investing adage buffett's investing adage holds up you got to be uh greedy during those times i will say one thing back to your comment david earlier about margin you know the the thing that gives you confidence during the extreme fear times like confidence to be greedy like the ability to be greedy is if you don't have margin it's a lot harder to be

greedy when you have margin like during that times of extreme fear because you're just like right you're feeling flushed you're flushed yeah you got nothing on the first so how do you be greedy when others are fearful it's no leverage fam like if you want to do that have the dry powder ready don't over invest long-term time horizons all of these things are important i think it's a it's also a practice in mindfulness if you can be

zen about the dip and be like yay i get to deploy capital uh everyone else is scared i'm scared too and i'm buying anyways that's a practice that's a practice in mindfulness and that's how you survive long term in crypto position yourself to do that you have to position yourself to do that too um this is a good take from hassou man he's he might be more eip1559 bullish than we are david and uh that podcast guys if you haven't listened to podcasts we had with haseo on eip1559 go listen to it

um but he did a thought experiment imagine if eip1559 was live today david what did he say here every single block mind during this big dip had 30 eth in fees or more that was the basal level of eath feast per block during this crazy volatility times all of that would be burned and retroactively paid like via buyback and burn to ether holders like 30 east just deleted every like 12 seconds by the way because that's how fast ethereum blocks 30 eth paid every 12 seconds uh i don't

know what that is annualized but it's a really big number um and then of course if proof of stake goes well uh stakers receive all of the extras fees right uh one day fees of uh 80 billion dollars i uh yeah 80 million excuse me uh i bet you i bet you it was over 100 yesterday i forgot to check it yesterday um but yeah i'm sure 80 million dollars of revenue per day like think of ethereum as a business 80 million of dollars per day in revenue with no overhead like

that's a profitable business that you want exposure to and ether is how you do that dude also look at uniswap i was like paying attention to uh ethereum all week on fee revenue but like look at uh look at uniswap man 10 million in fees sushi swap 8 million in fees this week uh decentralized exchanges have really hit their their stride and they do best in bull markets uh sorry involut in volatile market whether that's bull or like bearish volatility so here's a new

member on the uh the crypto fees uh pages uh quick swap which is the uniswap fork on polygon polygon yeah units what foreca polygon is the number one two three four fifth the fifth largest revenue generating application in all of crypto and it's on an ethereum l2 that is markets guys we are going to be back with some hot releases some news some takes of course meme of the week stay tuned for all of this but first we want to thank the sponsors that made this episode possible ave is a borrowing and lending protocol

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