02 October Bitfinex Alpha | Limits on Bitcoin supply and options pricing point to more volatility ahead
In Bitfinex Alpha
Today's surge in markets shouldn't come as a complete surprise to casual readers Bitfinex Alpha.
Bitcoin on exchanges has declined rapidly since March 2020 and has now reached its lowest level since early January 2018, significantly restricting supply.
Long-term BTC holders have been in “HODL” mode, with the three-plus-year-old Bitcoin supply remaining largely inactive since February 2023. The short-term BTC holder group is more willing to sell, but our analysis of the Consumer Output Age Bands shows that in While some Bitcoins that have been dormant for 12 to 18 months are returning to the market, Bitcoins held for 6 to 12 months remain largely stable.
The options market is starting to predict market movements this week. Potential volatility in Bitcoin prices became apparent when implied volatility exceeded historical volatility, which is often a reliable indicator that traders expect much higher volatility in the near future. A view also reflected in recent stock market performance.
Confidence in the market is arguably underpinned by the still healthy economic outlook – although some concerns remain. A strong labor market remains the main driver of economic growth in the United States, raising hopes for a soft landing. Despite the rise in headline inflation, August recorded a relatively weak core inflation figure, justifying the Fed's decision to keep interest rates unchanged.
However, we continue to highlight areas of risk, including the ongoing United Auto Workers strike, the resumption of student loan payments, rising energy costs, and persistently high interest rates that may conspire to derail spending and economic growth in the coming months.
Consumer confidence in the United States also declined in September, affected by higher interest rates and political tensions. The consumer confidence index showed a significant decline in future expectations. The Federal Reserve has signaled another potential increase in interest rates by the end of the year, and monetary policy is expected to remain tight through 2024. On the housing front, US home prices rose in July, but aspirations to buy homes were dampened by higher mortgage rates. And house prices increase. House prices.
Against this backdrop, the pace of cryptocurrency adoption continues to be hampered by regulatory delays. The decision on the latest filing for an Ether futures ETF has been postponed until December, the SEC said, while a large number of spot Bitcoin ETF applications that were scheduled for a decision this month are also expected to be postponed.
Meanwhile, we've seen Taiwan's regulator set new guidelines for the industry, prompting a proactive response from the local cryptocurrency industry, with major exchanges coming together to form a self-regulatory organization. In other news, former Terraform Labs CEO Do Kwon continues to fight extradition from Montenegro, IcomTech founder pleads guilty to wire fraud in connection with alleged cryptocurrency Ponzi scheme.
Happy trading!
