lawrence jenga
January 8, 2025 08:20
According to Bitfinex Alpha, as the price of Bitcoin reaches an all-time high, supply is shrinking, leading to an optimistic outlook for the cryptocurrency market.
Bitcoin (BTC) price recently surpassed $108,000, indicating solid market performance, as noted in the first 2025 edition of Bitfinex Alpha. Despite a potential market correction expected in the first quarter of 2025, tight Bitcoin supply presents an optimistic outlook for the medium term.
Bitcoin Supply Dynamics
Liquidity reserve ratio, a measure that tracks the current supply period, has decreased significantly from 41 months to 6.6 months. This means that the Bitcoin available on the market can only meet demand for a limited period of time, highlighting the rapid supply depletion. This trend was particularly evident during the period of strong price growth in the first and fourth quarters of 2024.
Miner activity and market impact
Bitcoin miners, traditionally known to sell significant amounts of Bitcoin during halvings, have noticeably reduced their exchange deposits starting in April 2024. The amount of Bitcoin sent to exchanges is at a multi-year low as miners hold onto significant unrealized profits. Rather than selling, it’s ‘hooting’.
Overall selling pressure from miners, long-term investors and other groups has decreased significantly, mitigating the impact of the recent market correction. This reduced supply pressure contributes to the continued strength of Bitcoin market performance.
US economic situation
As 2024 comes to a close, the U.S. economy has shown signs of recovery, but some sectors remain uncertain. The labor market remained strong, with jobless claims falling to an eight-month low of 211,000 by the end of December, beating expectations and strengthening confidence in the economy’s resilience. This unexpected decline, along with the continued decline in claims, signals a gradual cooling in the labor market without signaling a widespread recession. Positive labor data strengthened market sentiment, strengthened the dollar and supported a slight gain on Wall Street.
On the other hand, the construction sector shows a bleak outlook, with spending stagnating in November after moderate growth in October. Increases in single-family home construction were offset by declines in multifamily housing and public investment. High mortgage rates due to the incoming administration’s expected fiscal policy changes are weighing on housing demand and new projects. The construction industry faces attendant challenges, including potential tariffs, labor shortages, and trade uncertainty, which could hinder sustainable growth despite potential increases in future infrastructure spending.
Global and cryptocurrency market development
Meanwhile, the manufacturing sector is showing signs of recovery but remains under pressure. The December Purchasing Managers’ Index (PMI) rose to 49.3, the highest since March, but still below the growth threshold of 50. Despite improvements in production and new orders, the sector is struggling to fully recover from the prolonged downturn due to rising borrowing costs. After the previous Fed rate hike. Recent interest rate cuts and the prospect of fiscal stimulus from the incoming administration offer glimmers of hope, but concerns about trade policy and unstable global demand continue to cloud the industry outlook.
In other cryptocurrency news, U.S. Representative Mike Collins disclosed his investment in cryptocurrency Ski Mask Dog (SKI) ranging from $1,001 to $15,000. His filing, one of the first of 2025, highlights the growing intersection of digital assets and politics and raises questions about transparency and regulatory oversight. Meanwhile, defunct cryptocurrency exchange FTX has launched a restructuring plan to compensate users affected by its 2022 collapse. Customers who file a claim have 60 days to receive a refund, with small claims taking priority. MicroStrategy also announced plans to raise up to $2 billion through the issuance of perpetual preferred stock. The plan is part of the company’s ambitious ’21/21 Plan’ to secure $42 billion over three years for Bitcoin acquisitions, solidifying its position as the largest Bitcoin holder with over 145,000 BTC.
For more information, see Bitfinex Alpha.
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