October 30 Bitfinex Alpha | Institutions have returned to using Bitcoin, with sideways trading expected
In Bitfinex Alpha
Bitcoin's recent trajectory has been nothing short of meteoric. The cryptocurrency rose above $35,000, a level not seen in 17 months. This rally led to the liquidation of $275 million worth of short trades on October 23, the largest since January.
Institutional involvement in Bitcoin is becoming increasingly evident. CME Bitcoin options volume is set to close October at a record high of more than $2 billion. Meanwhile, options open interest is showing signs of renewal, currently standing at $1.15 billion. This renewed interest in Bitcoin by institutions combined with historical trend data indicates a 60 percent probability that Bitcoin's October upward trend will continue into November.
However, there is a significant amount of selling in the market. As Bitcoin breached the $35,000 level, a large group of short-term holders decided to take advantage of the rally. This profit-taking was the most pronounced since April 11, 2023. In contrast, long-term holders have remained largely resilient, with supply in this group reaching an all-time high of 14.899 million BTC. In essence, Bitcoin's recent performance paints a picture of a market in flux. While short-term bondholders seize the opportunity to make profits, long-term investors show unwavering confidence. Market dynamics suggest that we may be in the early stages of a cryptocurrency bull market.
On the macroeconomic front, new US single-family home sales in September saw a significant rise, the largest in 19 months, despite a notable decline in the average annual price. Builders are taking advantage of the shortage of pre-owned homes and offering discounts. However, with mortgage rates rising and demands dwindling, demand is expected to decline.
On the other hand, the United States is grappling with a growing financial challenge, as its debt, which currently stands at $33 trillion, is expected to rise. The 2023 budget deficit reached $1.695 trillion, an increase of 23 percent over the previous year. The debt-to-GDP ratio reached 97% in 2022, and is expected to rise to 107% by 2029. However, the US economy grew strongly in the third quarter, with a GDP growth rate of 4.9%, beating expectations.
This economic resilience can also be seen in the manufacturing sector. After facing five straight months of contraction, October brought a renewed rebound for US manufacturing, supported by a rise in new orders. The services sector followed suit, with the Purchasing Managers' Index rising to 50.9 – the highest level in three months. However, this economic growth is coupled with inflation concerns. Personal consumer spending inflation in September was 3.44 percent, and core inflation remains at 4 percent, double the Fed's long-term target.
In the dynamic cryptocurrency landscape, we had a positive news week. It has been revealed that JPMorgan's JPMorgan Coin boasts $1 billion in daily transactions, driven by its corporate and institutional clients. The market was also supported by the listing of the BlackRock Bitcoin ETF on the DTCC, sparking speculation that SEC approval was imminent – although such a listing is standard protocol and provides no indication of regulatory action.
Finally, Bitfinex Securities has unveiled a capital raise for one of the world's first tokenized bonds. Scheduled to debut next month, ALT2611 is raising funds to invest in microfinance opportunities and small and medium-sized enterprises in parts of Europe and along the Silk Road.
Have an excellent trading week!
