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Despite a recent decrease, Bitfinex Alpha Report’s 64th weekly review of traditional and crypto markets shows Bitcoin markets’ bullish outlook.

The 64th weekly Bitfinex Alpha report was recently published by the cryptocurrency exchange Bitfinex. The analysis of both traditional and crypto markets in the research leads to the conclusion that the current state of affairs shows that Bitcoin markets are appearing to be more positive. The report’s findings are unaffected by the fact that Bitcoin’s price remained above $29,000 despite the fact that it was written before yesterday’s decline.

The causes of the good feedback from cryptocurrency exchanges

The ongoing decline in the supply of BTC on cryptocurrency exchanges is the key factor behind the appearance of rising bullishness in the Bitcoin markets.

In particular, with balances down roughly 32% and only 11% of the total circulating supply present on exchanges thus far, it has returned to early 2018 levels.

Given that BTC is often traded on exchanges, the fact that there are so few of them implies that many people who now own Bitcoin choose to store it on non-custodial wallets instead of selling it since they do not find it convenient.

Of course, this number changes over time, and it typically increases as prices rise as it is then more easy to sell.

The research also notes that institutional and individual investors’ interest is rising, in part because to the biggest capital influx into investment vehicles backed by cryptocurrencies since 2021: $137 million last week alone.

According to their report:

“It appears to be a perfect storm as the decrease in balances is indicative of longer-term holders moving coins to cold storage, while the rise in fund flows is evidence of increased demand from traditional fund investors.”

A whale’s behavior

The study also mentions that whale activity has been a little out of the ordinary recently.

In particular, there has been a noticeable rise in the Whale Ratio statistic during the last 72 hours, which gauges the activity of the biggest active addresses relative to total market value.

On-chain analysis indicates that this spike is mostly attributable to the US Department of Justice purportedly moving money seized from Silk Road, even though Bitcoin deposits on crypto exchanges may have contributed to increasing selling pressure.

The substantial decrease in the overall value locked up on DeFi methods may also be a factor in the rise in the Whale Ratio. It dropped from roughly $46 billion on July 14 to the current $43 billion, after having dropped below $41 billion in the middle of June.

The perception of particularly high risks or the quest for better chances elsewhere may be causing investors to move some of their assets off DeFi protocols.

The dominance of the crypto derivatives market over the spot market at the moment would further support the whales’ existence. Additionally, both the volume of liquidations with excessive leverage and the number of unduly aggressive market participants are on the decline.

This shows that while institutional activity may have slightly increased, retail activity has significantly decreased.

The macroeconomic environment

The macroeconomic environment is likewise sending conflicting signals.

Indeed, increased monthly retail sales, which reflect a rise in consumer confidence, are one thing.

On the other hand, industrial production is drastically falling, which raises questions about the stability of the economy as it stands right now.

It is assumed that recent short-term expectations have been overly optimistic, but the facts have since proven this to be untrue. The same goes for home builders, who were continually hopeful for months before recently suffering some setbacks.

The primary issue would be the slow trend of interest rate hikes, which appears to be a significant factor in slowing growth, especially in new home projects.

The Leading Economic Index in the United States decreased for the fifteenth straight month, another indication that a recession may be on the horizon.

However, if the recession is not particularly severe (the so-called “soft landing”) and if the Fed decides to cease rising interest rates due to strong inflation data in the upcoming months, the scenario might become optimistic once more.

Because of this, Bitfinex experts claim that they expect a positive future for Bitcoin and the cryptocurrency sector, even though long-term market performance will ultimately largely depend on how people feel about the economy and regulatory clarity.

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