polymarket-candle-cross-asset-divergence-trader
Candle -- Cross-Asset Divergence Trader
This is a template. The default signal detects cross-asset divergence between BTC and other crypto coins on 5-minute interval markets and trades the convergence using conviction-based sizing. The skill handles all the plumbing (interval parsing, divergence detection, trade execution, safeguards). Your agent provides the alpha.
Strategy Overview
Polymarket lists 5-minute interval markets for BTC, ETH, SOL, and XRP: "Will Bitcoin be Up or Down in the 10:50AM-10:55AM ET interval?" These resolve to YES (up) or NO (down) based on actual price movement. Crypto assets are highly correlated -- when BTC moves, ETH/SOL/XRP typically follow within minutes. But on Polymarket's discrete 5-minute intervals, this correlation occasionally breaks down: BTC shows UP (>55%) while ETH shows DOWN (<45%) in the same time window. This divergence is structurally temporary because the underlying correlation reasserts itself. The less liquid coin (ETH/SOL/XRP) tends to converge toward BTC's direction.
Edge
Unlike generic correlation trading that requires continuous price feeds and complex cointegration models, this skill operates on Polymarket's discrete binary outcomes where the divergence signal is unambiguous:
- Structural correlation -- BTC, ETH, SOL, and XRP share macro drivers (risk appetite, USD strength, regulatory news) that create persistent positive correlation on 5-minute timeframes
- Liquidity hierarchy -- BTC interval markets are more liquid and efficiently priced; when BTC and a follower coin disagree, BTC is more likely correct because it incorporates information faster
- Discrete binary resolution -- each interval resolves to UP or DOWN, meaning a divergence between BTC=UP and ETH=DOWN must close by resolution time; one of them is wrong, and structural correlation says the follower is more likely wrong
- Market segmentation -- Polymarket participants trading ETH intervals may not simultaneously monitor BTC intervals, creating temporary informational inefficiency across correlated assets