November 20 Bitfinex Alpha | BTC is consolidating as the economy shows signs of stabilization
In Bitfinex Alpha
In contrast to the rally currently being seen in the altcoin market, Bitcoin is going through a phase of consolidation and uncertainty, with the price ranging amid fears of an extended decline.
Last week, BTC made a second attempt to break the $38,000 level, but the momentum was short-lived, as significant profit-taking was seen in both the futures market – as evidenced by a negative cumulative volume delta and an 8.7 percent drop in open interest – and in the spot market, There was a wall of limit sell orders.
Bitcoin is currently trading around the November monthly open, with signs of waning momentum, seeing positive funding rates on futures – which are historically linked to market declines – as well as the potential for selling pressure from short holders. Profits.
Currently, the holder's age range has swelled in the short term, corresponding to a 120 percent year-to-date increase in the price of Bitcoin. However, the current cycle shows a lower proportion of short-term holdings than previous cycles, indicating a concentration of current supply in the hands of long-term holders. As the fourth Bitcoin halving approaches, expected around April 2024, it has become clear that there is a significant tightening in the supply of Bitcoin. The “available supply” and “storage supply” rates indicate that long-term investors are accumulating Bitcoin at a rate that far exceeds new Bitcoin issuances. This contributes to a supply tightening scenario as the halving approaches. The increase in mining fees is also a major indicator of the strong health of the Bitcoin ecosystem. Higher fees indicate higher demand for processing transactions on the Bitcoin network, leading to increased revenues for miners. This is an important trend to watch as we head toward the halving in Q2 2024.
On the macro front, the burden of servicing the US national debt continues to burden the US Treasury. US debt has risen by about $10 trillion since 2020 to $33.7 trillion, with a $41 billion year-over-year increase in interest payments as interest rates rise.
However, there are signs of stabilization of the economy, especially in the area of inflation. The latest CPI report indicated a marked decline in core inflation, driven largely by lower gasoline costs.
This trend has fueled optimism that the Fed may hold off on raising interest rates again. Likewise, October retail sales and producer price data provide further support for the idea of stable inflation.
Despite these positive indicators, the economy faces industrial production challenges, especially in the automotive sector, where strikes organized by the United Auto Workers union against major automakers have led to a larger-than-expected decline in factory production.
On the brighter side, the economy is facing upward pressure on growth, supported by consumer resilience and a strong labor market. However, this growth also carries inflation risks. Therefore, a decline in industrial activity can help offset inflationary pressures. The combination of weak industrial production and steady consumer demand presents an accurate picture of the Federal Reserve navigating the path toward easing inflation and achieving a soft landing for the U.S. economy.
In the latest news from the cryptocurrency space, the US Securities and Exchange Commission (SEC) has delayed decisions on major ETF applications from Hashdex and Grayscale, reflecting continued cautious regulatory oversight of the instrument.
However, many believe it is only a matter of time before ETF approval is received, and Cathie Wood, CEO of ARK Invest, predicts that the total market cap of cryptocurrencies will rise from $1 trillion to $25 trillion by 2030, likening its potential to… Early Internet era. On the commercial front, Bakkt announced the expansion of its cryptocurrency custody portfolio, while the Monetary Authority of Singapore plans to issue a central bank digital currency for wholesale settlements.
All of this presents a picture of regulatory caution and optimistic growth expectations. Seems like a normal day at the office.
Happy trading!
