GP Statement on "CHIPs: Processes for consensus changes"
Version for this statement: b9214b1
Summary Statement
This CHIP has two main elements. 1) A meta-proposal for a structure that future CHIPs can use - GP fully supports a structure along these lines and has published a similar template that is descended from discussions with im_uname. 2) A meta-proposal for a schedule that future CHIPs can use - GP agrees with the reasons presented and will adhere to the proposed process in the absence of a better alternative.
Minor Recommendations for Improvement
GP submitted a number of minor fixes, clarifications and adjustments that went through reasonable discussion and acceptance or rejection. GP appreciates the constructive engagement.
The only remaining concern is the exclusive focus on developers as rare resources. GP's position is that in most cases, CHIPs require a multi-disciplinary team where each contributing member brings rare and valuable talent to the table such as software development, protocol design, documentation, organization and public communication.
General Protocols Blog
This article forms part of the General Protocols Blog, a collection of cross-platform links showcasing our team's community activity, Bitcoin Cash projects, UTXO development, and general crypto musings.
Bitcoin's (BTC) severe 26% drop from its $58,300 all-time high on Feb. 20 injected a bit of bearishness into the market, but from a technical perspective, this was purely psychological, as the digital asset held the $43,000 support with ease. This downside move caused indicators like the Crypto Fear & Greed Index to hit 38, its lowest level in five months.
Bitcoin price in U.S. dollars on Coinbase. Source: TradingView Even though a $15,400 downside move might seem unusual, 25% and even larger corrections happened on six separate occasions during the 2017 bull run. Moreover, when BTC first made an all-time high at $42,000 on Jan. 8, a 31.5% negative swing to $28,750 happened in the following two weeks.
As Bitcoin tried to establish a bottom, derivatives contracts eliminated any bullish signal and momentarily displayed worrisome data. For example, the open interest on futures dropped 22% after peaking at $19.1 billion on Feb. 21.
Bitcoin futures aggregate open interest. Source: Bybt As depicted above, considering the end-of-month expiry impact, BTC futures open interest fell by 22%. Albeit significant, the remaining $14.9 billion is still 44% above the previous month's data.
Derivatives indicators held steady, indicating a healthy market By measuring the futures contracts premium to the current spot levels, one can infer whether professional traders are leaning bullish or bearish. Typically, markets should display a slightly positive annualized rate, a situation known as “contango.”
Bitcoin 1-month futures annualized premium. Source: TradingView Although the one-month futures contracts premium toned down from the ultra-bullish 6% rate seen mid-February, it did manage to sustain levels above 1.2%. The annualized equivalent is a 70% peak compared with the current 17% rate. Therefore, the futures contracts premium indicates that any excessive leverage from buyers has been eliminated, but we are nowhere near a bear market.
Meanwhile, the BTC options markets 25% delta skew measures how the neutral-to-bullish calls are priced compared with equivalent bearish puts.
Bitcoin 1-month options 25% delta skew. Source: laevitas.ch The indicator acts as an options traders' fear and greed gauge and was sitting at -5% until Feb. 21, meaning protection to the upside was more expensive. Over the past week, the 25% delta skew moved to a neutral zone that was last seen almost five months ago.
This further confirms the absence of desperation from market makers and top traders while shredding signs of the excessive optimism seen in January.
The absence of bearishness during a crash is a good signal As institutional investors continue to flock to the space, Bitcoin’s volatility tends to have a lessened impact on derivatives markets. To illustrate this new situation, both BTC futures and options markets indicators were far from flashing any red flags despite the 26% price drop.
Bitcoin's positive newsflow and institutional investors interest is likely unharmed after the most recent retest of $43,000. Thus, as companies and mutual funds accumulate Bitcoin, instead of framing dips as catastrophic, these moves should be interpreted as buying opportunities.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.