November 20th Bitfinex Alpha | BTC Consolidates as Economy Shows Signs of Stabilization
On Bitfinex Alpha
In contrast to the rally currently seen in altcoin markets, Bitcoin is in a phase of consolidation and uncertainty, with its price fluctuating amid fears of a long-term decline.
Last week, BTC made a second attempt to break $38,000, but the momentum was short-lived as large profit-taking was seen in both futures markets. We see a negative cumulative volume delta and an 8.7% decrease in open interest. And in the spot market, there was a wall of sell orders.
Bitcoin is currently trading around its monthly opening price in November. There are signs of waning momentum and we are seeing positive funding ratios in futures contracts. This has historically been associated with market declines and it is possible that selling pressure from short holders may materialize. profit.
The current short-term holding age range is inflated, resulting in a 120% year-to-date increase in BTC price. However, in the current cycle, the proportion of short-term holdings is lower than in past cycles, indicating that supply is concentrated on long-term holders. As the fourth Bitcoin halving approaches, expected around April 2024, it has become clear that Bitcoin supply is shrinking significantly. The ‘Available Supply’ and ‘Stored Supply’ ratios indicate that long-term investors are accumulating Bitcoin at a rate that far exceeds new Bitcoin issuance. This is contributing to a scenario of supply tightening as the halving approaches. The increase in mining fees is also a key indicator of the health of the Bitcoin ecosystem. These rising fees mean higher demand for transaction processing on the Bitcoin network, which leads to increased profits for miners. This is an important trend to watch ahead of the halving in the second quarter of 2024.
On the macro level, the burden of U.S. national debt service continues to weigh on the U.S. Treasury. U.S. debt has increased by about $10 trillion since 2020, reaching $33.7 trillion, and interest payments have increased by $41 billion compared to the previous year as interest rates have risen.
That said, there are signs of stabilization in the economy, especially in the area of inflation. The most recent Consumer Price Index report showed a notable decline in core inflation, primarily due to lower gasoline costs.
This trend has fueled optimism that the Federal Reserve may stop further raising interest rates. Likewise, October retail sales and producer price data further support the notion of inflation stabilizing.
Despite these positive indicators, the economy is facing industrial production problems, particularly in the automotive sector, where factory output has fallen more than expected due to strikes by the United Auto Workers against major automakers.
On the positive side, the economy is seeing upward pressure for growth, driven by consumer resilience and a strong jobs market. But this growth also carries the risk of inflation. A decline in industrial activity could therefore help balance inflationary pressures. The combination of weak industrial production and steady consumer demand presents a nuanced picture as the Federal Reserve seeks a path to taming inflation and achieving a soft landing for the U.S. economy.
The latest news in the cryptocurrency space shows that the U.S. Securities and Exchange Commission (SEC) has postponed its decision on Hashdex and Grayscale’s major ETF applications, reflecting continued careful regulatory oversight of these products.
However, many believe that ETF approval is only a matter of time, and ARK Invest CEO Cathie Wood expects the overall cryptocurrency market capitalization to surge from $1 trillion to $25 trillion by 2030. Early Internet Era. On the business side, Bakkt announced expansion of its cryptocurrency custody portfolio, while the Monetary Authority of Singapore plans to issue a central bank digital currency for wholesale payments.
All of this shows caution in regulation and optimistic growth prospects. Sounds like a normal day at the office.
Happy trading!