November 6th Bitfinex Alpha | Cryptocurrencies outperform traditional assets because the supply side is still scarce.
On Bitfinex Alpha
So far this year, Bitcoin and Ethereum have shown remarkable resilience and growth, far outperforming traditional investments. Compared to gold, BTC and ETH have appreciated by 93% and 39% respectively. The performance correlation between BTC and Ether has also been noticeably tight throughout the year.
However, during the uptrend, BTC has performed well due to its first-mover advantage as a crypto asset, its perceived ‘digital gold’ status, and widespread institutional adoption. Interestingly, while commodity prices such as BTC and gold have reached significant highs, major indices such as S&P 500 and NASDAQ are still in a correction phase. This difference suggests a potential shift in market dynamics, with cryptocurrencies poised to continue outperforming traditional markets.
BTC price is currently up over 110% since the beginning of the year, with average term holders turning unrealized losses into profits. Historical patterns show that significant price surges often lead to consolidation or sharp pullbacks, especially due to an influx of novice investors. However, the decreasing number of days coins are destroyed indicates that long-term holders are maintaining firm holdings, underscoring their belief in the long-term value of Bitcoin. Moreover, wallets holding large amounts of BTC are showing inactivity, suggesting optimistic sentiment or preparing for future uncertainty.
The resilience of crypto assets this year reflects the Federal Reserve keeping a tight rein on the economy but no longer tightening it. In a widely expected move, the Federal Reserve kept interest rates steady between 5.25% and 5.50% while also raising its outlook for the U.S. economy, sending a signal of increased confidence.
Despite this optimism, activity in the U.S. manufacturing sector continued to decline in October. The recession is largely due to strikes at major automakers, suggesting that labor disputes are having a larger impact than previously recognized.
The ripple effects of the manufacturing sector’s struggles have been felt in the broader economy as job growth across the United States has lost momentum. Wages also rose at their most modest pace over the past year since mid-2021, suggesting a possible shift in labor market dynamics.
According to the latest news in the cryptocurrency industry, Sam Bankman-Fried has been found guilty on charges including wire fraud and money laundering following the dramatic collapse of FTX. These developments follow the convictions of key insiders.
Meanwhile, PayPal’s entry into the stablecoin space with PYUSD has been difficult, with the SEC issuing a subpoena to the company, signaling an ongoing investigation into cryptocurrency companies in the United States.
On a more positive note, the National Bank of Georgia is exploring a partnership with Ripple to pilot a digital Georgian lari. This project highlights Georgia’s efforts to integrate blockchain technology into the financial system amid growing CBDC exploration globally.
Happy trading!