May 6th Bitfinex Alpha | BTC Noisy, But Volatility Eases
On Bitfinex Alpha
In the Bitcoin market, we continue to see traders adapting to new supply rates of BTC in the market through mining and seeking price balance as they absorb increasingly complex messages about inflation and interest rates from macroeconomic indicators.
Last week, BTC fell to new local lows before a sharp correction, and the past week has seen volatile market sentiment despite major altcoins holding steady above their April lows.
A major development has been the activity observed among Bitcoin whales, as evidenced by the Exchange Whale Ratio. This suggests potential selling pressure as this group of investors appears likely to place their Bitcoin on exchanges to sell. That said, most of the aggressive selling historically has come from more price-sensitive short-term holders, i.e. those who have owned BTC for 155 days or less. For this group, the realized price is $58,700, which appears to be an important support level in the current market. Judging by the ratio of short-term holders’ realized value to market value, the selling trend appears to be decreasing.
Additional support can be found in the fact that volatility has decreased significantly following this halving. The significant decrease in Bitcoin’s implied volatility suggests that the market is stabilizing as expectations of rapid price fluctuations are reduced. Volatility risk premiums for both Bitcoin and Ethereum have decreased dramatically, indicating a rebalancing of market expectations toward a more stable and predictable environment.
This is happening because the current economic environment means the Federal Reserve is continuing its cautious and cautious approach by keeping interest rates at 5.25-5.50%, slowing the rate of decline in assets from its balance sheet and thus increasing demand for government bonds. .
Inflation continues, with the latest data for the Employment Cost Index rising faster than expected. This is because a tight labor market may force employees to demand higher wages due to inflation. However, job availability has not increased commensurately, which has led to a decline in consumer confidence in the labor market.
In fact, backing this up was a Bureau of Labor Statistics report showing job vacancies falling to their lowest level in three years and wages falling.
In cryptocurrency news last week, Binance founder Changpeng Zhao was sentenced to four months in prison for money laundering and sanctions violations. Hong Kong witnessed the debut of a new spot Bitcoin ETF, marking a significant step forward in the adoption of the cryptocurrency asset in the region, even though initial adoption was slow.
And finally, Tether, the world’s largest stablecoin issuer, reported a record $4.52 billion in revenue for the first quarter of 2024 and disclosed net capital of $11.37 billion, reflecting its strong financial position.
Have a great trading week.