November 13th Bitfinex Alpha | BTC Soars, But Be Careful What You Wish For
On Bitfinex Alpha
A strong week saw Bitcoin retrace some of its gains after hitting $38,000, its highest since May 2022. Even at current levels of $37,000, the average purchase price (STH RP) for short-term holders is approximately $30,380. This gap between STH RP and current market prices has been most pronounced since April 2022.
However, based on past performance, STH RP’s monthly movements suggest caution. An analysis of short-term and long-term holder cohorts shows that, historically, a $2000 monthly change in STH RP has been combined with a negative change in the average purchase price for long-term holders (where it is now), which has reached a local peak and could potentially push STH RP levels higher. Indicates that a withdrawal to test is likely to follow. At current levels, this theoretically suggests the price could fall into the $30,000-$31,000 range.
It is worth noting that market volatility is also high. The recent surge to $38,000 was accompanied by a significant market clearing of $491 million on November 9 alone. This is the highest since August 17. Current circumstances suggest it would be wise to err on the side of caution.
The availability of credit and lending standards across the economy is strengthening, impacting both businesses and consumers. However, these conditions are expected to gradually ease over time. This is because it reflects a decline in demand for loans as interest rates continue to remain high.
Further complicating this situation is the significant increase in household debt, up 1.3% in the third quarter, bringing total debt to $17.29 trillion. The largest annual increase in credit card balances since 1999 (credit card borrowings rose 4.7%) is one reason for this surge. This surge in credit usage indicates an increasing reliance on debt due to financial strain.
The labor market, while showing resilience, is showing signs of gradual weakening. There has been a notable increase in ongoing unemployment claims, suggesting that people receiving unemployment benefits are having an increasingly difficult time finding new jobs.
In addition to these economic difficulties, consumer sentiment is falling at its lowest since May. This decline adds another layer of complexity to the economic outlook.
High on the news agenda and one of the catalysts behind BTC’s recent sharp rise was the news of BlackRock, the world’s largest asset manager, filing for an Ether (ETH)-based Exchange Traded Fund (ETF). This news caused a temporary surge in the price of ETH, reaching around $2,100.
More good news about the usefulness of blockchain came when JPMorgan announced that it had introduced programmable payments within its JPM Coin system. This enables automated and rapid trading for institutional clients when certain conditions are met.
Also on the payments front, Singapore-based company Dtcpay announced the launch of a new payment system that supports both fiat and cryptocurrency assets, including Tether, Ether, and Bitcoin. The new system is designed to suit both in-store and online transactions.
And finally, FTX filed a lawsuit against Bybit to recover approximately $953 million in assets withdrawn by the company shortly before FTX’s collapse. This news sparked a rapid increase in FTX’s FTT token.
First off, it’s a week of positive news. Happy trading!