September 11 BTC liquidity and capital diminish as market becomes more event driven Bitfinex Alpha 71
In what has been another range-bound week for Bitcoin, we are seeing mining and supply dynamics become more prominent features of the market, amid more event-driven volatility.
Bitcoin mining costs are estimated at $24,287, which is close to the current market value, and this has resulted in a 2.65 percent decrease in mining difficulty with lower operational mining activities and hashrate.
Liquidity is also drying up, with roughly 69% of all bitcoins mined having not been moved in over a year. The world's largest cryptocurrency assets are in the hands of believers and long-term investors with extremely high conviction.
Any volatility in the cryptocurrency market is now increasingly attributed to shocks caused by events, such as the flash crash that occurred on August 17 or the expected positive news about the potential immediate approval of the Bitcoin ETF product by the SEC. However, capital is also moving away from the market. An analysis of the total realized value measure for Bitcoin, Ethereum, and major stablecoins indicates that about $55 billion in capital exited the market in August.
These dynamics come against the backdrop of ongoing mixed signals from the US economy. While the services sector grew, according to the latest PMI data, reinforcing persistent concerns about inflation, factory orders for hiring are slowing. Nonfarm productivity rose, but the inventory-to-sales ratio fell to its lowest level in more than 3 years. The US trade deficit continues to widen.
Of course, not all economic data should be given equal weight in assessing the overall economy and are not all correlated, but the lack of a clear picture means we expect policymakers to keep interest rates steady at next week's FOMC meetings.
In crypto news developments, legal access issues continue for FTX co-founder Sam Bankman Fried, as his defense challenges current arrangements. Meanwhile, Visa has partnered with Solana blockchain to boost stablecoin settlements. In the area of blockchain innovation, an Ethereum developer proposes creating an “Ethereum Supreme Court” to mediate major disputes.
Have a good trading week!
