Bitfinex Alpha | Bitcoin Prospects Positive, but Geopolitical Risk a Danger

Bitfinex Alpha | Bitcoin’s outlook is bright, but geopolitical risks are dangerous

In the new era after Bitcoin’s Q4 halving, on-chain dynamics are clearly positive. Current on-chain data shows Bitcoin exchange outflows have reached their peak since January 2023, with many investors moving their holdings to cold storage in anticipation of rising prices. It suggests that. On the other hand, aggressive selling by long-term holders has not yet caused the typical pre-halving price decline, indicating that new market entrants are well absorbing this selling pressure.

Miners are also adjusting their strategies in response to the decrease in block rewards. There has been a noticeable decline in BTC sent to exchanges by miners, and the pre-emptive sales and collateralization of holdings for infrastructure development, which began several months ago, are likely to be more likely than not to cause a shock to the market with the halving. This suggests that the selling pressure is being spread out over a longer period of time.

The drop in Bitcoin’s daily issuance rate after the halving is estimated to add between $30 million and $40 million worth of additional supply per day, which is one of the largest losses from the spot Bitcoin ETFs we’ve seen so far. This contrasts sharply with average daily net inflows of $150 million, highlighting a significant supply-demand imbalance. That could spur further price increases. That said, as we navigate a high-risk geopolitical landscape, market reactions may provide important insights into Bitcoin’s long-term viability and valuation as “digital gold.” It will be.

Additionally, the large purchases from spot Bitcoin ETFs that have dominated this year so far may still subside, and in fact we have seen outflows from ETFs in the last week, suggesting that ETF demand should stabilize. This suggests that there is a possibility of starting.

The current economic situation in the United States is also increasingly characterized by a complex interplay of international and domestic factors that shape market dynamics. Continuing tensions in the Middle East have heightened concerns in the global market, particularly affecting oil prices, but future geopolitical developments and subsequent policy responses could affect various sectors of the economy. may have an impact.

But even against this backdrop, American consumer behavior remains resilient. The latest retail sales data for March shows that consumer spending is sustained, supported by strong employment growth, despite higher consumer prices. This strong economic activity and recent rise in inflation are influencing the Federal Reserve’s monetary policy, which is now leaning toward holding off any interest rate cuts, possibly until September.

In contrast to this strong consumer spending, the housing sector faces challenges. Recent reports indicate that the construction industry is in a downturn, mainly due to increased borrowing costs. This is underlined by the decline in existing home sales, which fell significantly in March.

On the industrial side, the situation is even more encouraging. Industrial production increased in March, marking the second consecutive month of growth following a sharp decline in January. The sector appears to be more resilient to the economic pressures of tight monetary policy, with industrial production indicators remaining close to record highs over the past 18 months.

In a recent move in the cryptocurrency industry, the U.S. Internal Revenue Service has taken the notable step of introducing a draft Form 1099-DA designed to enhance the reporting of digital asset transactions. The move is part of broader regulatory proposals aimed at standardizing cryptocurrency brokerage services to more closely align with traditional financial brokers.

Parallel to these regulatory advances, public interest in cryptocurrencies continues to grow. Recent data highlighting Google searches for “Bitcoin halving” has reached new heights, surpassing previous interest levels seen in May 2020.

And finally, Tether, the world’s largest stablecoin issuer, announced the launch of four new business units: data, finance, power, and education. This expansion aims to leverage technology to build comprehensive infrastructure solutions that not only challenge traditional systems but also foster global financial empowerment.

Happy trading!

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