February 12th Bitfinex Alpha | Positive Bitcoin momentum across all time frames
On Bitfinex Alpha
Investor confidence in Bitcoin is growing, as evidenced by BTC’s rally late last week. We attribute this in part to a slowdown in Grayscale’s GBTC fund sales and a significant increase in overall cryptocurrency asset inflows.
In fact, the new BTC ETF’s Bitcoin holdings are now larger than MicroStrategy’s holdings, and the flow is expected to continue. These inflows, combined with the impending Bitcoin halving in 2024 and persistently high levels of illiquid supply (over 70% of BTC is in the hands of long-term holders), paint an exceptionally optimistic picture for BTC price action. .
On-chain data is increasingly supporting a more bullish environment for Bitcoin, especially with the MVRV ratio rising above the one-year simple moving average. Short-term holder realized prices are also providing positive signals. A slow appreciation rate for this metric means profit generation is slowing, suggesting a market consensus that there may be more room for growth.
Meanwhile, the current state of the US economy shows that a rate cut is unlikely to happen in March and is now more likely to happen in May. The latest Senior Lending Officer Opinion Survey found that the nuanced scenario of tightening lending standards across most loan categories continued at a slower pace in the fourth quarter, in an apparent response to the moderate contraction in loan demand across all categories.
This is reflected in the behavior of businesses and consumers, who are reluctant to take out new loans, as evidenced by the sharp decline in consumer credit growth. The backdrop of high interest rates is casting a shadow over consumer spending, which we believe presents a compelling case for the Fed to cut interest rates soon.
But on balance, new data shows U.S. services accelerated, driven by a rise in new orders and recovering employment levels.
The picture is of a U.S. economy that has shown remarkable resilience despite challenges posed by high borrowing costs, tight credit conditions and declining pandemic-era savings.
Substantial government spending and consumer savings have played a pivotal role in boosting GDP and employment growth. But it is clear that higher borrowing costs and tighter credit conditions risk curbing economic activity, which should spur the Fed to respond to maintain economic growth momentum and address new challenges.
In the cryptocurrency space, a new Bitcoin ETF has hit a new milestone with its holdings now surpassing MicroStrategy. This growth particularly highlights the strong preference of investors for easier access to these products and to delegate management to third parties.
Parallel to this momentum, the regulatory environment continues to evolve, with Hong Kong opening a public consultation on a new licensing framework to govern over-the-counter trading. The plan seeks to strengthen regulatory clarity and protect investors by curbing money laundering and terrorist financing risks.
Institutional enthusiasm for cryptocurrency investment is also reflected in Chicago Mercantile Exchange data, which shows Bitcoin futures trading increased 42% to $73 billion following the approval of the spot Bitcoin ETF, up 35% from January volume. appeared to have increased.
Moreover, the regulatory environment is being strengthened elsewhere, with Korea introducing a virtual asset user protection law scheduled to go into effect on July 19. The bill imposes strict regulations on the cryptocurrency industry, including severe penalties for serious violations such as market manipulation and illegal activities. transaction.
Happy trading!