Bitfinex Alpha | Bitcoin Breaks Below Range but Impetus Still with the Bulls

Despite some price slippage in Bitcoin to below the $30,000 mark, we still see an array of on-chain metrics signalling the beginning of a bull market. Central bank rate hikes seem to be a lesser concern with the market largely pricing these in.

More notable in our view is that Bitcoin’s Market Price still remains above its Realised Price, suggesting market participants, on aggregate, are profiting. Meanwhile, the Bitcoin network continues to grow, as new address creation is escalating at a rate previously linked to positive price movements.

We also take comfort in a number of other metrics such as the Bitcoin Realised Profit-Loss Ratio, the Adjusted Spent Output Profit Ratio, and Bitcoin Supply in Profit, which all indicate a predominantly profitable Bitcoin market and favourable conditions for sellers.

In terms of long-term holder behaviour, the Reserve Risk indicator is also showing a gradual increase in conviction, while the Realised HODL Multiple (RHODL) has also been trending upwards, suggesting a decreasing supply of coins for sale, leading to more bullish market sentiment.

When Bitcoin broke down last week from a month-long range of $31,500 to $29,500, it was also telling that no significant change in order flow and options behaviour was observed. Despite a minor increase in market volatility, derivatives market behaviour remains unchanged, pointing towards continued low volatility and buyer/seller behaviour consistency.

We also introduce this week our Correlated Market Watch feature, which examines looks at how closely tied are the price movements of Bitcoin, the S&P500, and the NASDAQ-100. We find that the current S&P500 level of 4560 points could impact global risk assets like Bitcoin, depending on its direction from here. Similarly, Bitcoin correlation metrics for NASDAQ and S&P500 have seen a significant upturn, hinting at a strengthened symbiosis.

We note there is a looming threat of a significant correction and these are important indicators to watch.

In the broader economy, the ongoing quest by the Fed to slow inflation without crashing the economy continues. Despite an 11th  interest rate hike last week the Fed remains focused on slowing the economy and weakening the labour market in order to subdue inflation to two percent.

The latest PCE data shows progress is being made, while consumers continue to remain confident, and the housing market remains resilient.

Further afield, we also take a look at recent surveys from the European Central Bank, which reveal alarming trends in the euro zone’s economy, particularly a significant drop in loan demand.

It was also a lively crypto news week. Transaction volumes on the Optimism blockchain overtook the hitherto dominant Arbitrum, following the high-profile launch of Worldcoin, which is built on Optimism. 

Meanwhile, the regulatory winds continued to blow with the Bank Policy Institute, an advocate for traditional finance, aligning with Senator Elizabeth Warren to strengthen Anti-Money Laundering laws for digital assets, targeting money laundering and terrorism financing in the crypto market. The House Financial Services Committee also advanced a bipartisan bill to overhaul cryptocurrency regulation, providing clearer guidelines while facing resistance from some Democrats. 

In more courtroom drama, a federal judge has imposed a gag order on former FTX CEO Sam Bankman-Fried due to witness tampering allegations, and  CoinsPaid accused the North Korean Lazarus Group of orchestrating a cyberattack resulting in the theft of $37.3 million and hobbling its operations.

Even if liquidity remains low in crypto markets, the news agenda remains furious. Happy trading!

Happy trading!

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