04 March Bitfinex Alpha | More Bitcoin price increases will come as ETF inflows continue
In Bitfinex Alpha
Open interest in Bitcoin futures and perpetual pairs across centralized exchanges has reached a new record, rising to over $26 billion. The rise in OI reflects the bullish momentum behind BTC, which rose 44 percent in February, its strongest monthly performance in percentage terms since December 2020.
Net inflows into Bitcoin ETFs (now at $7.5 billion) are of course an important driver, and we believe there is still more capital inflows to come. More traditional financial wealth advisors and investment platforms will make ETFs available to their clients, and allocations will increase.
Enthusiasm for Bitcoin has also extended to other currencies. The TOTAL3 index, which represents all crypto assets except Bitcoin and Ether, has seen a 50 percent rise since January 22. It is worth noting that memcoins and AI-related projects are currently leading in both spot accumulation and futures speculation, indicating diversification of investor interest beyond leading cryptocurrencies.
In the macro economy, inflation remains constant. With the recent reported rise in the Personal Consumption Expenditures index for January, we now believe that current market expectations of four-quarter-point rate cuts for this year may need to change course, which could result in smaller rate cuts. Although the United States reported disappointing growth in new single-family home sales in January, demand for housing remains strong and home prices – the main inflationary factor – continue to rise.
Meanwhile, in the cryptocurrency space, Hong Kong is quickly emerging as a cryptocurrency hub, which is evidenced by the 22 companies that have applied for licenses to operate cryptocurrency exchanges accessible to retail investors.
This contrasts with the regulatory landscape in the United States, where Hester Peirce, Commissioner of the Securities and Exchange Commission, has expressed criticism of the current regulatory approach taken by the SEC and called for clearer and definitive rules around the classification of digital assets as securities.
While the regulatory wheel continues to turn slowly, public enthusiasm for crypto assets remains steady.
The total value locked in decentralized finance (DeFi) lending protocols has now risen to over $32 billion. This demonstrates the growing confidence and stability observed in the market, as DeFi matures and security and transparency increase. Likewise, traditional finance household names like Fidelity recommend allocating 1-3% to cryptocurrencies.
Have a great trading week!
