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“All fiat-currency alternatives – which have all gone through fairly recent substantial corrections – are in a much better place now to handle that eventual taper and gradual slowing of money-supply growth than they were as they were making higher-highs after higher-highs,” Troy Gayeski, co-chief investment officer and senior portfolio manager at SkyBridge Capital, told Bloomberg last week. 

“We’re going to stick to bitcoin and crypto because we just think there’s more upside,” Gayeski added. 

Fed taper refers to a gradual unwinding of the monetary stimulus that has triggered risk taking across financial markets over the past 12 months. Bitcoin, for one, rallied from $10,000 to over $60,000 in the seven months to April before recently falling to $30,000. Gold rallied to record highs above $2,000 an ounce in August 2020. However, the yellow metal deflated to lows near $1,680 early this year and was recently trading near $1,880. 

Markets have been betting on an early unwinding of stimulus by the Fed ever since the U.S. economy started to show signs of life in the first quarter, reinforced by April inflation climbing to the highest level since 2008.

On Sunday, U.S. Treasury Secretary Janet Yellen said President Joe Biden’s $4 trillion spending plan would be positive for the economy, even if it leads to higher interest rates. 

Taper talk or rate-hike expectations tend to lift yields on U.S. Treasuries, making the dollar more attractive and weakening demand for assets like gold and bitcoin. The 2013 taper tantrum saw a decline in gold and emerging-market currencies.

Still, the 10-year Treasury yield has been locked in a range of 1.5% to 1.7% this quarter, having risen from 0.98% to 1.74% in the first three months. Furthermore, the Fed has downplayed the inflation scare and taper speculation in recent weeks, and remains committed to buying $120 billion of Treasury and mortgage-backed securities a month.

Gayeski expects the central bank to stand pat for the rest of the year. “Even when it’s announced, the Fed is not going to start reducing the pace of its purchases until 2022,” Gayeski said. 

According to Bloomberg, SkyBridge Capital’s bitcoin fund has gained more than 50% since its inception in December. The hedge fund also has a small exposure to a gold miner. 

Also read: Crypto Long & Short: Bitcoin’s Taproot Update Shows How It’s Not Like Gold 

In a taped announcement on Saturday, El Salvador President Nayib Bukele said he plans to submit legislation that will make bitcoin (BTC, -0.82%) legal tender. The announcement lifted investor sentiment, with some calling a potential adoption at the government level a major bullish development.

However, the cryptocurrency remains locked well within Saturday’s trading range of $34,900 to $37,900. At press time, bitcoin is changing hands near $36,200, according to the CoinDesk Bitcoin Price Index, up 1% on the day.

China’s regulatory crackdown and U.S. Treasury Secretary Janet Yellen’s latest comments on interest rates could be capping the gain.

Also read: Bitcoin, Other Cryptos Fall After Weibo Blocks Rekindle Fears of China Crackdown

On Sunday, Yellen told Bloomberg that President Joe Biden’s $4 trillion spending proposal would be positive for the country, even if it leads to a rise in interest rates. “If we ended up with a slightly higher interest rate environment, it would actually be a plus for society’s point of view and the Federal Reserve’s point of view,” Yellen said.

A rate increase dilutes the appeal of perceived inflation hedges such as bitcoin and gold.

China stepped up its crackdown on bitcoin trading and mining over the weekend, blocking many cryptocurrency “key opinion leaders” on Weibo. The move comes weeks after China reiterated its long-standing ban on cryptocurrency trading and mining, sending the price of bitcoin lower.

My colleague George Kaloudis recently reminded me that there’s one important aspect in which bitcoin (BTC, -0.82%) will never be like gold: In a vault or in the ground, gold will always be gold; bitcoin, however, is a technology, and a technology will be updated. This quality is now on display with the Bitcoin network’s progress toward an update called Taproot. (Keep an eye out for George’s forthcoming in-depth report on Taproot at coindesk.com/research.)

Taproot is a bundle of several improvement proposals. Notable among them, it would add data efficiencies that could ease supply-side pressure in Bitcoin’s transaction-fee market. It also includes updates to multi-signature transactions, a Bitcoin feature that is significant for custodians and other organizations that take direct custody of bitcoin. In this column, I’ll focus on the latter.

Multi-signature addresses are a governance tool for organizations that directly custody bitcoin. Taproot includes updates designed to make multi-sigs easier to use, and to improve their privacy: a multi-signature Taproot transaction cannot be distinguished from other Taproot transactions. This could be significant for organizations that require multi-signature transactions, but do not wish to advertise to the network that they are using them.

Bitcoin’s pseudonymity has made it a target for criticism that the network can be used for criminal purposes. Pseudonymity also provides security for legitimate operators. On the internet, nobody knows you’re a dog; on Bitcoin, nobody knows you’re a financial institution. For organizations using the Bitcoin network, privacy reduces the likelihood of cyberattack.

This chart, adapted for readability from txstats.com, shows just how visible current multi-sig users are to the network. It also raises a question: With multi-sig growth at anemic levels, is there really demand to justify adding these features? (We discussed that question on CoinDesk TV’s “All About Bitcoin” show last week.) 

Multi-sig’s shortcomings may be a barrier to adoption, which Taproot could address, opening the door to increased use. That could improve custodian services and make direct-custody forms of investment more attractive. Or, this could be a vaunted new feature that nobody will use. (Remember Microsoft Sets?)

Most technology investors understand the technology risk inherent in an update. (See Samsung Galaxy Note 7.) There’s also the adoption risk of developing a feature that nobody uses. Unlike Ethereum, Bitcoin developers prefer backwards-compatible updates. After Taproot is implemented, users will still be able to use pre-Taproot transactions. This would be self-defeating for Taproot’s multi-sig privacy features: pseudonymity only works in a crowd.

Improving multi-sigs also could make it easier to develop applications on top of Bitcoin, an especially relevant issue in 2021 as decentralized finance, non-fungible tokens and stablecoins have driven the cryptocurrency bull market. At this writing, the year-to-date returns on ether (ETH, +1.27%) are roughly 10 times those of bitcoin.

At this point, it seems likely that Taproot will be enacted by the Bitcoin network, as more and more miners signal approval. Whether users take advantage of its features will be a telling test of bitcoin’s adaptability and, by extension, its viability as an updatable technology investment.

On the other hand, a perceived inability to update or adapt may strengthen Bitcoin’s resemblance to gold – which, after all, does neither.

Among events in Bitcoin’s history, the Taproot update is receiving far less attention than, say, the Bitcoin halving, which occurred around this time last year. In the long run, it may prove more significant.

MATIC, currently ranked 18th as per market capitalization by Messari, rallied 120% in May even as bitcoin fell by 35%. Ether (ETH, +2.73%), polkadot (DOT, +0.94%), cardano (ADA, +0.12%), XRP (+0.67%), and decentralized finance (DeFi)-blue chips suffered bigger losses, pushing the total market capitalization of the crypto universe down by 24%. 

MATIC was able to withstand the the worst effects of the downdraft thanks to Polygon’s soaring usage and constant growth in the congestion and high costs that plague the DeFi-dominating Ethereum blockchain, as analytics firm IntoTheBlock mentioned in its research note published on June 2. 

“Throughout 2021, Ethereum fees skyrocketed up to 845% compared to the year before; currently, a transaction on the network costs around $4.819,” IntoTheBlock said. “On the other hand, transacting on the Polygon network only costs around $0.001 to transfer $200.”

As such, several DeFi protocols flocked to Polygon – a sidechain running tangent to Ethereum’s blockchain, offering high transaction output and relatively low costs without compromising security. Scaling refers to increasing the throughput of the system, as measured by transactions per second.

MATIC’s impressive performance proves a cryptocurrency backed by strong fundamentals can largely hold its own against a price slide in bitcoin. As such, the token could continue to appreciate in the coming months unless Ethereum sees a sustained drop in transaction costs or usage.

Ethereum rivals like Polkadot, Solana, and Binance Smart Chain would also seem ready to gain. However, as Polygon is a sidechain that works in conjunction with Ethereum, it benefits from Ethereum’s dominating network effects and thus holds an edge over blockchains that seek to replace the market-leading giant. Perhaps that’s why tokens powering Ethereum rivals Polkadot, Solana, and Binance Smart Chain suffered double-digit losses in May even as MATIC extended a four-month run of gains. A recent string of flash loan attacks on products built on the Binance Smart Chain likely didn’t help the reputation of the would-be Ethereum dethroners either.

While MATIC proved remarkably resistant in the face of bitcoin’s price crash, it wasn’t completely immune. The majority of gains happened in the first half of the month, before the biggest cryptocurrency fell from $58,000 to $30,000 in the eight days to May 19 on concerns regarding the negative environmental impact of crypto mining and China regulatory fears. MATIC’s price hit an all-time high of $2.72 for a year-to-date gain of 248% before bitcoin’s troubles took their toll.

Before MATIC began giving back some its gains in mid-May, the token’s performance was rising in line with the soaring usage of the protocol itself. During the month, the number of average daily active users on Polygon surged by 285% from 7,500 to 28,873, according to blockchain data provider Covalent. The sidechain became busier than ever as more users accessed DeFi via the low-cost scaling solution. 

Per Covalent, the number of unique addresses using Aave protocol on Polygon shot up by 156% to 15,769 in May. The decentralized money market giant received over $5 billion in liquidity via the layer 2 scaling solution. Aave announced integration with Polygon in April. 

Meanwhile, average daily unique users on Polygon-based decentralized exchange QuickSwap rose by 302% to over 10,000, and the liquidity on the platform increased by 68% to $924.78 million, Covalent said in an email. 

“The almost fee-less trading Polygon offers offered a breath of fresh air to seasoned DeFi traders that have been suffering under the weight of extremely high gas prices [Ethereum fees] for some months now,” Tim Frost, CEO of Yield app, said while explaining reasons for Polygon and QuickSwap’s success. 

Polygon’s performance has led the protocol to receive validation from prominent investors like Mark Cuban. Further, the token has been added to the Bitwise 10 Large Cap Crypto Index (BITX) with a weightage of 1.03%, according to LiveMint. The index is managed by Bitwise Asset Management, a crypto asset manager with $1.5 billion worth of assets under manager.

“The early rally seemed to be driven by a mix of savvy DeFi users and retailers, but now popular investors like Mark Cuban are publicly diving in,” Nick Mancini, chief community officer at Trade The Chain, told CoinDesk. 

Cuban confirmed being an investor in Polygon on May 26, but refrained from disclosing the size or composition of his stake. However, Polygon’s co-founder Sandeep Nailwal told Economic Times on May 27 that his project received a “sizeable investment” from the billionaire entrepreneur and not through a simple purchase of tokens.

“I was a Polygon user and find myself using it more and more,” Cuban said in an email to CoinDesk at the time. His website describes Polygon as “the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development.”

Trade The Chain’s Mancini said he expects more institutional inflows into DeFi assets and a continued rally in MATIC, albeit after some downside in June. The token has come under pressure this week, falling by 15% to $1.58. Still, prices are up 8,800% year-to-date. 

Yield CEO Tim Frost said Polygon and QuickSwap’s momentum might slow once the Ethereum 2.0 (proof-of-stake upgrade) is completed. Developers estimate that the upgrade will happen by the end of this year or early 2022. After that, Ethereum founder Vitalik Buterin plans to implement the sharding upgrade to ease congestion and bring down fees. 

However, Polygon CEO Sandeep Nailwal said he’s confident that layer 2 scaling solutions will prevail even after the upgrade allows Ethereum transaction costs to decline. 

“Ethereum 2.0 will become 64 times more scalable than Ethereum is now, but the demand is 1,000 times than where we are. You will need L2 scalability,” Nailwal told CoinDesk.

Also read: Money Reimagined: The Power of Community 

MATIC, currently ranked 18th as per market capitalization by Messari, rallied 120% in May even as bitcoin fell by 35%. Ether (ETH, +3.36%), polkadot (DOT, +2.5%), cardano (ADA, +1.34%), XRP (+1.66%), and decentralized finance (DeFi)-blue chips suffered bigger losses, pushing the total market capitalization of the crypto universe down by 24%. 

MATIC was able to withstand the the worst effects of the downdraft thanks to Polygon’s soaring usage and constant growth in the congestion and high costs that plague the DeFi-dominating Ethereum blockchain, as analytics firm IntoTheBlock mentioned in its research note published on June 2. 

“Throughout 2021, Ethereum fees skyrocketed up to 845% compared to the year before; currently, a transaction on the network costs around $4.819,” IntoTheBlock said. “On the other hand, transacting on the Polygon network only costs around $0.001 to transfer $200.”

As such, several DeFi protocols flocked to Polygon – a sidechain running tangent to Ethereum’s blockchain, offering high transaction output and relatively low costs without compromising security. Scaling refers to increasing the throughput of the system, as measured by transactions per second.

MATIC’s impressive performance proves a cryptocurrency backed by strong fundamentals can largely hold its own against a price slide in bitcoin. As such, the token could continue to appreciate in the coming months unless Ethereum sees a sustained drop in transaction costs or usage.

Ethereum rivals like Polkadot, Solana, and Binance Smart Chain would also seem ready to gain. However, as Polygon is a sidechain that works in conjunction with Ethereum, it benefits from Ethereum’s dominating network effects and thus holds an edge over blockchains that seek to replace the market-leading giant. Perhaps that’s why tokens powering Ethereum rivals Polkadot, Solana, and Binance Smart Chain suffered double-digit losses in May even as MATIC extended a four-month run of gains. A recent string of flash loan attacks on products built on the Binance Smart Chain likely didn’t help the reputation of the would-be Ethereum dethroners either.

While MATIC proved remarkably resistant in the face of bitcoin’s price crash, it wasn’t completely immune. The majority of gains happened in the first half of the month, before the biggest cryptocurrency fell from $58,000 to $30,000 in the eight days to May 19 on concerns regarding the negative environmental impact of crypto mining and China regulatory fears. MATIC’s price hit an all-time high of $2.72 for a year-to-date gain of 248% before bitcoin’s troubles took their toll.

Before MATIC began giving back some its gains in mid-May, the token’s performance was rising in line with the soaring usage of the protocol itself. During the month, the number of average daily active users on Polygon surged by 285% from 7,500 to 28,873, according to blockchain data provider Covalent. The sidechain became busier than ever as more users accessed DeFi via the low-cost scaling solution. 

Per Covalent, the number of unique addresses using Aave protocol on Polygon shot up by 156% to 15,769 in May. The decentralized money market giant received over $5 billion in liquidity via the layer 2 scaling solution. Aave announced integration with Polygon in April. 

Meanwhile, average daily unique users on Polygon-based decentralized exchange QuickSwap rose by 302% to over 10,000, and the liquidity on the platform increased by 68% to $924.78 million, Covalent said in an email. 

“The almost fee-less trading Polygon offers offered a breath of fresh air to seasoned DeFi traders that have been suffering under the weight of extremely high gas prices [Ethereum fees] for some months now,” Tim Frost, CEO of Yield app, said while explaining reasons for Polygon and QuickSwap’s success. 

Polygon’s performance has led the protocol to receive validation from prominent investors like Mark Cuban. Further, the token has been added to the Bitwise 10 Large Cap Crypto Index (BITX) with a weightage of 1.03%, according to LiveMint. The index is managed by Bitwise Asset Management, a crypto asset manager with $1.5 billion worth of assets under manager.

“The early rally seemed to be driven by a mix of savvy DeFi users and retailers, but now popular investors like Mark Cuban are publicly diving in,” Nick Mancini, chief community officer at Trade The Chain, told CoinDesk. 

Cuban confirmed being an investor in Polygon on May 26, but refrained from disclosing the size or composition of his stake. However, Polygon’s co-founder Sandeep Nailwal told Economic Times on May 27 that his project received a “sizeable investment” from the billionaire entrepreneur and not through a simple purchase of tokens.

“I was a Polygon user and find myself using it more and more,” Cuban said in an email to CoinDesk at the time. His website describes Polygon as “the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development.”

Trade The Chain’s Mancini said he expects more institutional inflows into DeFi assets and a continued rally in MATIC, albeit after some downside in June. The token has come under pressure this week, falling by 15% to $1.58. Still, prices are up 8,800% year-to-date. 

Yield CEO Tim Frost said Polygon and QuickSwap’s momentum might slow once the Ethereum 2.0 (proof-of-stake upgrade) is completed. Developers estimate that the upgrade will happen by the end of this year or early 2022. After that, Ethereum founder Vitalik Buterin plans to implement the sharding upgrade to ease congestion and bring down fees. 

However, Polygon CEO Sandeep Nailwal said he’s confident that layer 2 scaling solutions will prevail even after the upgrade allows Ethereum transaction costs to decline. 

“Ethereum 2.0 will become 64 times more scalable than Ethereum is now, but the demand is 1,000 times than where we are. You will need L2 scalability,” Nailwal told CoinDesk.

Also read: Money Reimagined: The Power of Community 

MATIC, currently ranked 18th as per market capitalization by Messari, rallied 120% in May even as bitcoin fell by 35%. Ether (ETH, +3.1%), polkadot (DOT, +1.65%), cardano (ADA, +1.25%), XRP (+2.51%), and decentralized finance (DeFi)-blue chips suffered bigger losses, pushing the total market capitalization of the crypto universe down by 24%. 

MATIC was able to withstand the the worst effects of the downdraft thanks to Polygon’s soaring usage and constant growth in the congestion and high costs that plague the DeFi-dominating Ethereum blockchain, as analytics firm IntoTheBlock mentioned in its research note published on June 2. 

“Throughout 2021, Ethereum fees skyrocketed up to 845% compared to the year before; currently, a transaction on the network costs around $4.819,” IntoTheBlock said. “On the other hand, transacting on the Polygon network only costs around $0.001 to transfer $200.”

As such, several DeFi protocols flocked to Polygon – a sidechain running tangent to Ethereum’s blockchain, offering high transaction output and relatively low costs without compromising security. Scaling refers to increasing the throughput of the system, as measured by transactions per second.

MATIC’s impressive performance proves a cryptocurrency backed by strong fundamentals can largely hold its own against a price slide in bitcoin. As such, the token could continue to appreciate in the coming months unless Ethereum sees a sustained drop in transaction costs or usage.

Ethereum rivals like Polkadot, Solana, and Binance Smart Chain would also seem ready to gain. However, as Polygon is a sidechain that works in conjunction with Ethereum, it benefits from Ethereum’s dominating network effects and thus holds an edge over blockchains that seek to replace the market-leading giant. Perhaps that’s why tokens powering Ethereum rivals Polkadot, Solana, and Binance Smart Chain suffered double-digit losses in May even as MATIC extended a four-month run of gains. A recent string of flash loan attacks on products built on the Binance Smart Chain likely didn’t help the reputation of the would-be Ethereum dethroners either.

While MATIC proved remarkably resistant in the face of bitcoin’s price crash, it wasn’t completely immune. The majority of gains happened in the first half of the month, before the biggest cryptocurrency fell from $58,000 to $30,000 in the eight days to May 19 on concerns regarding the negative environmental impact of crypto mining and China regulatory fears. MATIC’s price hit an all-time high of $2.72 for a year-to-date gain of 248% before bitcoin’s troubles took their toll.

Before MATIC began giving back some its gains in mid-May, the token’s performance was rising in line with the soaring usage of the protocol itself. During the month, the number of average daily active users on Polygon surged by 285% from 7,500 to 28,873, according to blockchain data provider Covalent. The sidechain became busier than ever as more users accessed DeFi via the low-cost scaling solution. 

Per Covalent, the number of unique addresses using Aave protocol on Polygon shot up by 156% to 15,769 in May. The decentralized money market giant received over $5 billion in liquidity via the layer 2 scaling solution. Aave announced integration with Polygon in April. 

Meanwhile, average daily unique users on Polygon-based decentralized exchange QuickSwap rose by 302% to over 10,000, and the liquidity on the platform increased by 68% to $924.78 million, Covalent said in an email. 

“The almost fee-less trading Polygon offers offered a breath of fresh air to seasoned DeFi traders that have been suffering under the weight of extremely high gas prices [Ethereum fees] for some months now,” Tim Frost, CEO of Yield app, said while explaining reasons for Polygon and QuickSwap’s success. 

Polygon’s performance has led the protocol to receive validation from prominent investors like Mark Cuban. Further, the token has been added to the Bitwise 10 Large Cap Crypto Index (BITX) with a weightage of 1.03%, according to LiveMint. The index is managed by Bitwise Asset Management, a crypto asset manager with $1.5 billion worth of assets under manager.

“The early rally seemed to be driven by a mix of savvy DeFi users and retailers, but now popular investors like Mark Cuban are publicly diving in,” Nick Mancini, chief community officer at Trade The Chain, told CoinDesk. 

Cuban confirmed being an investor in Polygon on May 26, but refrained from disclosing the size or composition of his stake. However, Polygon’s co-founder Sandeep Nailwal told Economic Times on May 27 that his project received a “sizeable investment” from the billionaire entrepreneur and not through a simple purchase of tokens.

“I was a Polygon user and find myself using it more and more,” Cuban said in an email to CoinDesk at the time. His website describes Polygon as “the first well-structured, easy-to-use platform for Ethereum scaling and infrastructure development.”

Trade The Chain’s Mancini said he expects more institutional inflows into DeFi assets and a continued rally in MATIC, albeit after some downside in June. The token has come under pressure this week, falling by 15% to $1.58. Still, prices are up 8,800% year-to-date. 

Yield CEO Tim Frost said Polygon and QuickSwap’s momentum might slow once the Ethereum 2.0 (proof-of-stake upgrade) is completed. Developers estimate that the upgrade will happen by the end of this year or early 2022. After that, Ethereum founder Vitalik Buterin plans to implement the sharding upgrade to ease congestion and bring down fees. 

However, Polygon CEO Sandeep Nailwal said he’s confident that layer 2 scaling solutions will prevail even after the upgrade allows Ethereum transaction costs to decline. 

“Ethereum 2.0 will become 64 times more scalable than Ethereum is now, but the demand is 1,000 times than where we are. You will need L2 scalability,” Nailwal told CoinDesk.

Also read: Money Reimagined: The Power of Community 

Read more: Square’s $50M Bitcoin Buy Is Now Worth $253M

Read more: Square’s $50M Bitcoin Buy Is Now Worth $253M