September 18 Bitfinex Alpha 72 | Ethereum chain activity is rising, with markets remaining calm
In Bitfinex Alpha
Cross-chain activity on Ethereum's Layer 2 (L2) networks is hovering near bull market highs. Ethereum's L2 networks, such as Polygon, Arbitrum, and others, process transactions at five times the rate of the mainnet. The total value of assets locked (TVL) on Ethereum remained stable at around $21.45 billion, while assets locked on L2 scaling solutions more than doubled to $9.56 billion.
Meanwhile, Bitcoin has seen its latest narrative formed by short-term holders (STH), who have distributed 1.3 million Bitcoin in transactions, worth $35 billion, since January. The average realized price of Bitcoin hovers around $20,500, making this a strategic level for the asset. When Bitcoin surpassed $28,200 last month, long-term holders (LTHs) were withdrawing their investments, with STHs stepping in. However, current metrics depict STHs unloading these assets, with LTHs taking advantage of the opportunity to buy back. The “surrender of time” by the STHs is typical of this group. It continues the trend within BTC markets of greater LTH accumulation.
The economic outlook remains healthy which is why we do not expect any movement on interest rates at the FOMC this week. Economic surveys point to inflationary pressures, employment struggles, and volatile consumer sentiment. While August consumer prices rose 0.6 percent, largely driven by a 10.6 percent jump in gasoline prices, core inflation registered a more moderate growth of 0.3 percent. On the other hand, producer prices rose 0.7%, the largest rise since June 2022, also driven by gasoline costs. These increases point to potential obstacles to achieving low inflation in the coming months.
But retail sales also rose by 0.6 percent and the labor market showed resilience, indicating confidence in the economy. In short, the US economy is at a crossroads and becoming increasingly difficult to read.
Cryptocurrency headlines last week were dominated by the latest traditional asset manager – Franklin Templeton – seeking approval for a Bitcoin exchange-traded fund, mirroring previous submissions from Blackrock, Fidelity, Invesco and Ark Invest. While this bodes well for the future of the asset, we also continue to grapple with legacy issues of the past. Former FTX CEO Sam Bankman Fried (SBF) failed in his bid to be released from prison, while Binance.US announced the resignation of its CEO, amid increasing regulatory scrutiny. Furthermore, Genesis Global Capital announced the cessation of spot trading operations for cryptocurrencies and derivatives, while Paybit announced its decision to evacuate the UK market, in preparation for tougher regulations from the UK regulator in October.
Happy trading!
