January 8 Bitfinex Alpha | Bitcoin volatility increased ahead of the ETF decision.
On Bitfinex Alpha
It wouldn’t be Bitcoin if the year didn’t start off with a bang! After ending the last quarter of 2023 up 57%, within three days of 2024, BTC fell 11% on January 3, the auspicious day of Bitcoin Genesis Block Day. Reports that the long-awaited Bitcoin spot ETF may not be approved at all have wiped out billions of dollars in open interest and led to significant liquidation of both long and short positions. These developments are always harsh, but we believe they are sound and entirely predictable.
On-chain metrics also tell an interesting story. Coin Days Destroyed December 27, an unremarkable day for the price of Bitcoin. This suggested strategic positioning for long-term BTC holders, perhaps in anticipation of a pivotal regulatory decision on Bitcoin. The long-awaited Bitcoin spot ETF.
As we mentioned Bitfinex Alpha According to our 2024 outlook report, we believe the market remains vulnerable to a decline, particularly around the $44-45,000 level, and remains highly sensitive to regulatory developments.
The new year also begins with a complicated but positive-looking U.S. economic picture. New data from the construction sector shows spending is rising year on year, indicating that demand and investment are expanding despite manufacturing falling into contraction territory not only in the US but also in the eurozone and China.
In the latest minutes from last December’s Fed meeting, policymakers made clear their view that interest rates appear to have peaked, with most officials predicting a move to lower rates by the end of 2024.
However, one factor that could undermine this view is the labor market, which significantly exceeded expectations in terms of new jobs added in December. Evidence of further growth will again stoke inflation fears, and officials will be wary of cutting interest rates too quickly.
On the news front, the year started with a number of positive developments, with some of the largest asset managers beginning preparations for ETFs, all vying for a position to launch regulated spot Bitcoin ETF products.
Visa, one of the world’s largest credit and debit card companies, also unveiled its Web3-based loyalty rewards system. This allows customers to accumulate digital assets such as tokenized tickets and loyalty coins that can be used in both virtual and physical experiences.
Embarrassed cryptocurrency lending platform Celsius also revealed that it is releasing its Ethereum holdings to repay creditors. Meanwhile, the Bank of Spain announced a testing program for a wholesale central bank digital currency, inviting participation from the financial and technology sectors to explore how such a currency could be used to move funds and settle financial assets.
The start of the year was fun. Happy trading!