Welcome to the latest issue of Bitfinex Alpha. In this issue, we start the week with our look at the latest macroeconomic developments and what this means for crypto markets.
The recent Consumer Price Inflation print though expected to be high, still delivered shock value. We delve deeper into both inflation indicators and employment data. We also take the viewpoint of the NFIB survey to understand the true state of the US economy. Our conclusion is that it is no longer a question of whether we will head into a recession but about how deep and how wide it will be.
On the crypto front, we are seeing an apparent decoupling of bitcoin from treasuries as the negative correlation between the two assets increases dramatically – whether this remains a permanent trend remains to be seen.
On the bright side, however, we conclude that despite this gloom, the creativity and the energy of the crypto markets remain unabated. Our research indicates that while we are clearly in a post-capitulation market where market participants have faced forced liquidations and remain heavily underwater on spot positions; the crypto market still offers significant investment opportunities, as Ethereum and NFT volumes see a spike in transactions. Over 10k new wallets are buying their first NFT every day on Ethereum, and the blockchain is near an all-time high for NFT projects, with more than 10 sales a week.
Our round-up of crypto news highlights the filing of Chapter 11 bankruptcy protection for Celsius, but as the excess of the previous market cycle is washed out, it is positive that innovation continues to flourish in the crypto sphere. Even algorithmic stablecoins are not dead, with a new type of stablecoin currently being debated (positively) by the Aave community.