October 30th Bitfinex Alpha | Institutions are back in Bitcoin, sideways trading expected
On Bitfinex Alpha
Bitcoin’s recent trajectory has been nothing short of meteoric. The cryptocurrency surged past $35,000, a level not seen in 17 months. The rally triggered the liquidation of $275 million worth of shorts on October 23, the largest since January.
Institutional involvement in Bitcoin is becoming increasingly evident. Bitcoin’s CME options trading volume is set to end October at an all-time high of over $2 billion. At the same time, options open interest, currently pegged at $1.15 billion, is showing signs of recovery. This renewed interest in BTC from institutions combined with historical trend data suggests there is a 60% chance that Bitcoin’s upward trend in October will continue into November.
That said, there is a significant amount of sales happening in the market. When Bitcoin surpassed $35,000, a significant number of short-term holders decided to join the bull. This profit taking was most pronounced after April 11, 2023. But in contrast, long-term holders have largely held steady, with supply from this group reaching an all-time high of 148.99 million BTC. In essence, Bitcoin’s recent performance shows that the market is liquid. While short-term investors are seizing the moment to take profits, long-term investors are showing unwavering confidence. Market dynamics suggest that we may be in the early stages of a cryptocurrency bull market.
On the macroeconomic front, sales of new U.S. single-family homes in September rose the most in 19 months, despite a notable decline in the annual median price. Builders are taking advantage of the shortage of used homes by offering discounts. However, demand is expected to decline as mortgage rates rise and applications decline.
Meanwhile, the United States is grappling with burgeoning financial problems, with its current $33 trillion debt set to rise. The budget deficit in 2023 reached $1.695 trillion, a 23% increase from the previous year. The debt-to-GDP ratio hit 97% in 2022 and is expected to rise to 107% in 2029. Nevertheless, the U.S. economy grew robustly, with GDP growth in the third quarter exceeding expectations at 4.9%.
This economic resilience can also be seen in the manufacturing sector. After five straight months of economic downturn, U.S. manufacturing revived in October thanks to a surge in new orders. The services sector also followed suit, with PMI rising to 50.9, the highest in three months. But this economic growth is juxtaposed with inflation concerns. The personal consumption expenditures inflation rate in September was 3.44%, and the core inflation rate is still 4%, which is twice the Fed’s long-term target.
We’ve had a positive news week in the dynamic cryptocurrency landscape. JPMorgan’s JPM Coin was revealed to have a daily trading volume of $1 billion, mainly from corporate and institutional clients. The market also saw the DTCC listing of BlackRock Bitcoin ETF, sparking speculation that SEC approval was imminent. However, these listings are standard protocols and do not provide any indication of regulatory action.
Finally, Bitfinex Securities disclosed the capital raising of one of the world’s first tokenized bonds. ALT2611 is scheduled to debut next month and is raising funds for microfinance opportunities and investment in small and medium-sized enterprises in parts of Europe and the Silk Road region.
Have a great trading week!