December 11th Bitfinex Alpha | Beware of price modifications
On Bitfinex Alpha
This week’s on-chain analysis focuses on key inflection points in the Bitcoin market and where they play out. The recent surge in BTC has led to it reaching a significant resistance level of $45,000. This surge represents an increase of over 170% since the beginning of the year and would see a complete reversal of the 64% decline experienced in 2022. However, it is important to note that a core group of investors – the so-called medium-term investors (holding for 2-3 years) – account for approximately 16% of the active Bitcoin supply and a significant portion of the market realized capitalization.
On the positive side, Bitcoin supply on centralized exchanges has reached a six-year low, marking the 45th consecutive month of supply decline. This trend is seen as a bullish signal, indicating a shift toward longer-term holdings or decentralized storage solutions and a decline in selling intent. Additionally, the number of BTC deposit transactions on exchanges is at its lowest level in years, suggesting selling pressure has eased.
However, Bitcoin’s Disbursed Output Profit Ratio has remained above 1 for 44 consecutive days, indicating that a significant portion of Bitcoin holders are currently taking profits. This is especially true for long-term holders. This relatively long period of profit-taking raises concerns that the rally may be overextended, as similar trends have preceded market corrections in the past.
Recent price movements in the $44,000-$45,000 range demonstrate the interaction between spot and perpetual markets. Closing short positions in a perpetual market will help push prices higher, but the market will also face volatility and potential corrections at higher levels. Overall, while the market is currently showing upside potential, investors should be cautious of possible consolidation or decline.
The current U.S. economic environment continues to be mixed due to a cooling labor market and consumer credit growth contrasting with productivity gains and employment growth, although we believe the interest rate cuts are over.
October saw a notable decline in U.S. job vacancies, hitting the lowest level in two and a half years. This decline, part of a trend observed since the beginning of last year, suggests a cooling in labor demand, largely due to the impact of rising interest rates.
Slowing credit growth also signals that tightening lending standards and rising interest rates are impacting consumer spending and lending, making them more cautious. Meanwhile, the number of Americans applying for unemployment benefits increased only slightly and remained stable, indicating that the number of layoffs was low despite the slowing employment rate. The Fed now faces the challenge of balancing further interest rate hikes with the need to stabilize the economy.
In recent cryptocurrency news, Hive Digital Technologies announced a successful investment in Bitmain mining equipment and has already realized profits due to the recent surge in the value of Bitcoin.
El Salvador has launched ‘Freedom VISA’ targeting Bitcoin and cryptocurrency millionaires. The program requires an investment of $1 million in BTC or USDt and offers long-term residency and potential citizenship. Japan’s ruling coalition is also becoming more friendly to cryptocurrencies and is considering tax reforms that would exempt companies from paying taxes on unrealized profits from long-term cryptocurrency holdings.
Meanwhile, in the United States, senators from both parties proposed the Counter-Terrorist Financing Act. The proposed law, which aims to curb the use of digital assets to finance terrorist activities, would give the U.S. Treasury the authority to block transactions with sanctioned entities involved in digital asset trading. This bill represents an important step toward integrating digital currencies into the existing financial regulatory framework.
Have a great trading week!