April 22nd Bitfinex Alpha | Bitcoin outlook is positive, but geopolitical risks are dangerous
On Bitfinex Alpha
In the new era of Bitcoin’s fourth halving, on-chain dynamics are clearly positive. Currently, on-chain data shows that Bitcoin exchange outflows are reaching highs not seen since January 2023, suggesting that many investors are moving their holdings into cold storage in anticipation of a price rise. Meanwhile, active selling by long-term holders has not yet triggered a typical pre-halving price decline, indicating that new market entrants have strongly absorbed this selling pressure.
Miners are also adjusting their strategies in response to decreasing block rewards. There has been a noticeable decline in BTC sent by miners to exchanges, suggesting pre-emptive selling or pledging of holdings for infrastructure upgrades that began several months ago, and potential selling pressure over a longer period of time rather than causing a market shock during the halving. is to spread it.
The decline in Bitcoin’s daily issuance rate after the halving, which is estimated to add $30 million to $40 million worth of supply per day, stands in sharp contrast to the $150 million average daily net inflows we have seen in spot Bitcoin ETFs. , highlighting the significant supply-demand imbalance. This could further push prices higher. That said, as we navigate this treacherous geopolitical situation, the market’s reaction will provide important insight into the long-term viability and valuation of Bitcoin as “digital gold.”
Moreover, the bulk buying from spot Bitcoin ETFs, which has been the dominant story so far this year, may still subside, and in fact we saw outflows from ETFs last week. This suggests that ETF demand may be starting to stabilize.
The current economic environment in the United States is characterized by a complex interplay of international and domestic factors that shape market dynamics. Ongoing tensions in the Middle East have heightened concerns in global markets, particularly affecting oil prices, but this could also impact various sectors of the economy depending on future geopolitical developments and resulting policy responses.
But even against this backdrop, U.S. consumer behavior remains resilient. The latest retail sales data for March shows continued consumer spending, driven by strong job growth despite rising consumer prices. This robust economic activity, combined with the recent rise in inflation, is impacting the Fed’s monetary policy, with the current rate cut delay expected to be delayed until September.
In contrast to this robust consumer spending, the housing sector is facing challenges. According to recent reports, the construction slowdown is primarily due to rising borrowing costs. This is highlighted by the decline in existing home sales, which fell significantly in March.
In the industrial sector, the situation is more encouraging. Industrial production increased in March, showing an increase for two consecutive months after a significant decline in January. The sector appears to be more resilient to the economic pressures of tighter monetary policy, with the industrial production index remaining near record highs for the past 18 months.
In a recent development in the cryptocurrency industry, the US Internal Revenue Service has taken a notable step by introducing a draft Form 1099-DA designed to strengthen the reporting of digital asset transactions. The move is part of broader proposed regulations to standardize cryptocurrency brokerage services to align them more closely with traditional financial intermediaries.
Parallel to these regulatory developments, public interest in cryptocurrencies continues to surge. Recent data highlighting Google searches for ‘Bitcoin halving’ has reached new levels, surpassing levels of interest previously seen in May 2020.
And finally, Tether, the world’s largest stablecoin issuer, announced the launch of four new business units: Data, Finance, Power, and Education. This expansion aims to leverage technology to not only challenge existing systems but also build comprehensive infrastructure solutions that promote financial empowerment globally.
Happy trading!