GM, and welcome to another edition of The Castle Chronicle.

It’s been a rather bearish couple of days in crypto, BTC is selling off, and the whole market is red.

Here’s what has happened this week:

• 📈 Price Action – BTC is losing momentum. What can we expect next?

• 🔍 Market Watch - A deeper look into a bloody market

• 🗳️ Teaser – A quick look at MegaETH

• 💙Arbitrum Corner – Innovating at the Speed of Arbitrum

📈 PRICE ACTION

It’s been a long couple of weeks of back and forth, indecision, and slow bleed in the crypto market, but now BTC has finally decided to make a move. Unfortunately, it’s to the downside.

The weekly chart has lost its momentum cycle, and we can see some significant bearish price action on the lower timeframes.

• Healthy uptrend

• Momentum cycle lost

Losing a momentum cycle by itself doesn’t mean too much, but it’s definitely a first sign of loss of momentum. In healthy uptrends our first assumption should always be re-accumulation.

I marked previous instances of the same thing happening on the chart with white circles - the lost momentum cycle often results in more sideways price action for the purpose of re-accumulation, and that is my expectation here as well.

That being said, this market continues to be untradable for me. The weekly direction is still bullish, so I’m looking for reasons to go long. But there’s a long way of price building up before I see the green light for trades again.

As traders, more than 90% of our job is waiting for the right conditions to be met. And until they are, we gotta make sure not to do anything silly. Remember, you can outperform the majority of the market simply by staying on the side-lines.

Not following what I’m talking about? Check out my quick cheatsheet to understand how I approach a chart.

Courtesy of 0x_Vlad - Castle Lab’s Male Astrologist

🔍️ MARKET WATCH

TOP PERFORMERS

While BTC is selling off it’s no surprise to not see any strong performers in the market. There might be some outliers, especially in the lower market cap bracket, but I don’t see a reason to look for any. In typical Wyckoff fashion we should only look for relatively stronger performers when the main asset is clearly bullish, which currently is NOT the case.

FEAR AND GREED INDEX

It’s interesting to see that the Fear & Greed index is showing neutral numbers compared to the previous week’s extreme fear. I hope it’s because people stabled up and didn’t enter any new trades and patiently wait on the sidelines.

CAPITAL FLOW

Last week we saw significant inflows into Arbitrum and huge outflows out of Base. This week, we can see the exact opposite. Overall the numbers aren’t anything out of the ordinary, just regular capital flow.

NARRATIVE PERFORMANCE

The overall market is taking a beating and there’s almost no demand to be seen anywhere. All categories are in the red with DeFAI getting rekt the most. This should serve as further proof that looking for bullish trades during times like these is generally not a wise thing to do.

Courtesy of 0x_Vlad - Castle Lab’s Male Astrologist

🗳️ A QUICK LOOK AT MEGAETH

As Ethereum's network continues to expand, scaling solutions have become a critical focus for developers and investors alike. In a report to be published next week, we’ll highlight MegaETH. They are building the world’s first real-time blockchain, aiming to address latency and throughput challenges through sub-10ms block times.

On Monday we’ll publish a report exploring MegaETH’s technical innovations, its potential impact on DeFi and the blockchain ecosystem as a whole, and how it compares to other scaling solutions and L1s.

Courtesy of NDW - Fundamental Researcher at Castle Labs

💙 ARBITRUM ECOSYSTEM SPOTLIGHT

Welcome to another edition of the Arbitrum Corner!

This week, we bring you an ecosystem spotlight on some of the most interesting protocols building on Arbitrum.

MASSDOTMONEY

The stock market is falling and you’re thinking of buying some stocks?

Mass is a mobile app that allows you to buy stocks such as $COIN, $HOOD, and more assets directly on-chain on Arbitrum!

Dividends also accrue directly to your wallet.

Mass also introduces other improvements, which abstract some of the complexity of trading on-chain, such as a Gas tank that you can fill with any crypto and you can use to pay gas across all networks.

Here’s Hunter showing how easy it is:

The protocol currently offers over 45 stocks and ETFs, with plans to reach over 150 by the end of the year:

ELDORADO

We’ve already touched on Eldorado in one of our first Arbitrum Corners, highlighting their real world impact. With many protocols losing focus on how their product works in practice, it is refreshing to see a very practical application, which is improving the lives of a lot of people.

Eldorado is an app focused on allowing users to buy and sell USDT peer-to-peer, and transfer it freely with EldoradoPay.

With many countries plagued by inflation, having USDT (or other stablecoins) available to purchase is fundamental to having a chance to shield savings from inflation. Eldorado supports FIAT currencies from most South American countries, including Venezuela, Brazil, Colombia, Argentina, Peru, and Bolivia.

Eldorado has now reached over 1m downloads in the app store:

But that’s not all - they received over 33k reviews with a score of 4.8:

What are users doing with Eldorado?

70% of retail consumers use Eldorado for its interoperability, as they connect most of the region’s payment methods.

“For example, a freelancer might get paid in PayPal or Zelle, but since most local businesses don’t accept those, they swap their balance for stablecoins and cash out through their preferred local payment app.”

Eldorado also services individual "market makers", providing stablecoin liquidity and earn a spread on their buy and sell orders.

They currently “have 10,000 market makers making anywhere from $500 to $3,000 per month”., showing the strength of their decentralized approach.

We advise reading more on this interesting article from @artemis_xyz:

RENEGADE

Renegade is a protocol providing fully private trading with zero MEV, slippage, or price impact.

They can do so by leveraging multi-party computation (MPC) to match peer-to-peer orders and zero-knowledge proofs for trade settlement. All trades on Renegade are executed at the real-time Binance midpoint price, without any spread or price impact.

Who is Renegade for?

• Liquid Token Funds: Instead of incurring spreads by trading OTC, they can use Renegade to execute their orders at the midpoint price.

• Market Makers: Market makers can anonymously rebalance net hedged or delta-neutral positions, “balancing inventory without needing to cross a public spread”.

• AMM Takers: Trades on Renegade are guaranteed to execute at midpoint prices, avoiding MEV attacks, price impact, or arbitrage.

How has Arbitrum benefited Renegade? Stylus has proven to be a massive boost for Renegade allowing them to “verify the equivalent of nearly a dozen zero-knowledge proofs” while still costing “less than $1 in gas and taking less than 1 second to match”.

CLUTCH

Clutch is a decentralized parlay platform (DPP), a fully on-chain and non-custodial betting platform recently launched on Arbitrum:

In addition to single bets, users can combine multiple ones from sportsbooks or polymarket bets into a single wager, increasing their payout.

There’s no limit to creativity.
Here, someone combined a price prediction on SOL with an NBA match-winner:

The platform is provably fair, as it operates in a trustless manner and with no third-party interventions.

Clutch just reached over $100k in betting volume:

Users can keep up with all the new bets using Clutch AI assistant’s X ACCOUNT: https://x.com/AiAgentkAia 

Clutch was initially live on Sanko, and eventually moved to Arbitrum. Why?

That’s it for this week.

Despite the market downturn, the Arbitrum ecosystem is lively and dynamic, as shown by the multitude of new and interesting protocols that are being launched.

Are you building on Arbitrum and want to be featured? Get in touch with us!

Courtesy of Francesco - Founder at Castle

And that’s all for this week! It’s been rather bloody and while the overall high timeframe still suggests a bullish market, currently it looks far from it.

These are the best times to touch grass and build.

Stay safe and see you next time!

In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn't guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.