April 15th Bitfinex Alpha | Supply tightening due to Bitcoin halving
On Bitfinex Alpha
Following Bitcoin's sharp sell-off on Saturday after Iran launched drones and other missiles toward Israel, early indications were that the correction was a more future-focused move than fundamental.
Last Friday and Saturday saw the largest two-day liquidation in cryptocurrency history (over $1.8 billion), but a key indicator that emerged after the sell-off was that funding rates in cryptocurrency perpetual markets became neutral and turned negative for some altcoins. This adjustment has been healthy and volatility may be reduced. BTC's rebound to $65-66,000 after falling below $60,000 in Saturday's futures market suggests the market has broken the selloff significantly.
More fundamental to Bitcoin price dynamics is this week’s halving. As the halving approaches, there has been a noticeable surge in BTC leaving centralized exchanges, and the inactive supply of BTC that hasn't moved in over a year has been reduced to 18 months. low.
This appears to indicate that long-term holders (LTHs) are continuing to reduce their holdings or move assets off exchanges. There has definitely been a noticeable change in the composition of the Bitcoin investor base, with new entrants (short-term holders) absorbing the supply sold from LTH. This is evidenced by the rising market value to realized value ratio of STH. Although still below the highest levels seen in previous cycles. If the dynamic of STH absorbing LTH selling continues, this could indicate room for further price appreciation.
All of this is happening against the backdrop of a US economy where inflation appears to be here to stay and prospects for an early interest rate cut are rapidly diminishing. Consumer prices rose unexpectedly in March, and the moderate rise in producer prices did not inspire much optimism in the market.
The broader labor market continues to strengthen, small and medium-sized businesses are increasingly feeling the pressures of inflation, and many businesses are reporting that their selling prices are increasing and that they plan to increase prices further in the near future. These trends highlight ongoing inflation concerns and support the Fed's cautious stance against an immediate cut in policy rates.
In addition to economic uncertainty, persistent inflation and rising fuel costs in the previous quarter led to a decline in consumer confidence in April. This decline in consumer sentiment, along with broader economic indicators, suggests a rate cut could come as late as September.
In cryptocurrency news this week, leading decentralized finance platform Uniswap announced that it has received a notification from the U.S. Securities and Exchange Commission that Wells is offering unregistered securities on its platform. Uniswap disputes this, arguing that certain tokens, especially stablecoins and utility tokens, should not fall into this classification.
In Europe, regulatory developments are also shaping the operations of cryptocurrency exchanges. Kraken announced that it is delisting Monero, a privacy-focused crypto asset, for customers in Ireland and Belgium. This appears to be in response to the need to comply with new EU anti-money laundering regulations.
However, on a more positive note, Bitfinex Securities El Salvador SA de CV, Bitfinex's El Salvador registered securities platform, announced that it will begin issuing tokenized debt to finance the construction of a new Hampton by Hilton hotel complex at El Salvador International Airport. . This is the first issuance arranged and traded by Bitfinex Securities El Salvador after becoming the first entity licensed under El Salvador's Digital Asset Securities Act. Bitfinex said it has a healthy pipeline of additional future issues that it expects to ultimately bring to the market.
Have a great trading week!