04 Sep Bitfinex Alpha | Crypto asset funds are seeing withdrawals, but Bitcoin remains stable
In Bitfinex Alpha
Short-term data points suggest that Bitcoin and the broader crypto asset sector are seeing a decline in confidence. As delays continue in getting long-awaited spot approvals for Bitcoin ETFs, by the last week of August, cryptocurrency funds saw outflows of $168 million, the largest since March, with another $11 million in the week. the past. Bitcoin funds have also suffered from outflows, with year-to-date trading volumes peaking on August 30. The cumulative exodus has depleted a staggering 89% of total assets under management that were allocated to cryptocurrency investments.
Despite the turmoil in digital investment instruments, underlying asset prices remain surprisingly stable, with no real change in price away from the $26,000 level seen in the past two weeks. Furthermore, consistent exchange flows of Bitcoin, to supposedly self-custodial cold wallets, suggest that long-term holders of Bitcoin are still bullish and, rather than trading, are simply holding on to it.
Admittedly, stablecoins, which are often seen as the early birds signaling interest in investing in crypto assets, have also not seen an increase in supply yet, but stablecoin payment adoption continues to grow – which we see as long-term indicators to support this. sector.
On-chain metrics indicate that the market bottom may be upon us. The Output Spent Profit Ratio (SOPR), which has historically been an odd indicator of market temperatures, is currently approaching equilibrium, having advanced from 0.97 previously, and indicates that more bitcoins on the chain are being held close to profit. Historically this has tended to instill more confidence in the market. Meanwhile, HODL Waves data shows that Bitcoin is becoming increasingly illiquid, with measures of supply inactivity above three years reaching new highs over the past 45-60 days.
In the broader economy, the picture also looks positive. In the housing sector, US home prices rose in June, although a sustained rise in interest rates is fueling employment. Job openings in the United States fell to 8.8 million. Unemployment is now at 3.8%, but wage growth is slowing, suggesting an easing of inflationary pressures and supporting our view that interest rates will remain on hold at the next FOMC meeting.
Despite all this, the great American consumer seems unfazed, and consumer spending in July reached a peak not seen in six months.
We concluded last week with Robinhood repurchasing shares previously owned by FTX and Grayscale in celebration of its victory over the SEC in a court ruling holding that it was wrong for the Commission to refuse to convert the flagship Grayscale Bitcoin Trust into a listed Bitcoin ETF.
Have a good trading week.
