Bitfinex Alpha | BTC and ETH Looking Positive, but Alt Season Not Yet In

Both Bitcoin and Ether markets look very positive.

Bitcoin ETF flows continue to be robust, even in a market shortened week last week, with some $600 million of net inflows recorded. Centralised Exchanges are also witnessing a heightened demand for BTC, highlighted by a significant withdrawal of over 18,000 BTC from Coinbase, leaving the platform with its lowest Bitcoin reserve since 2017. The redistribution of this withdrawn BTC into new wallets indicates bullish investor behaviour, as seen in both the Coinbase Premium Index, and the Kimchi Premium. 

Ether too has got substantial momentum behind it, breaching the $3,000 mark and gearing up for its highest weekly close in 97 weeks. This surge is fueling discussions about the potential onset of an ‘altcoin season’, a phase where alternative cryptocurrencies outshine Bitcoin. The Ether exchange reserve across all exchanges shows a net outflow exceeding 800,000 ETH, indicating a strong supply crunch that could propel its price further.

Taking history as a guide, the current stabilisation of Bitcoin dominance at just above 51 percent, could presage the beginning of a new altcoin season. However, while there has been an increase in liquidity in the top 20 altcoins, some of this can be attributed to a decline in liquidity for those coins outside the top 20.

Such a shift in liquidity dynamics suggests cautious investor sentiment, with a preference for more established and liquid assets, and that the market’s appetite for less mainstream tokens has not yet shown a significant resurgence.

The US economy is also looking rosy. The Conference Board has announced a much more positive outlook, marking a significant reversal from its previous warnings of an impending recession. The resilience of the US economy, evidenced through continued growth in output, employment, and consumer spending, underpins its confidence, suggesting that the economy is robust enough to withstand any economic fluctuations.

Fed Vice Chair Philip Jefferson also confirmed that the Fed’s intention is to reduce interest rates this year, but that it continued to keep a close eye on the robust consumer spending, which, though it has prevented a recession, could equally feed through to greater inflation.

Recent new data underscores the optimism, with a significant drop in initial jobless claims to a five-week low, and the S&P Global Flash Purchasing Managers’ Index for February showing only a slight deceleration, as business activities continue to expand. This ongoing resilience in manufacturing and business sectors further complements the broader economic outlook.

In crypto news, Reddit has announced IPO plans and in doing so, revealed its investments in Bitcoin and Ether and its acceptance of crypto for virtual goods transactions. Meanwhile, the Law Commission of England and Wales is consulting on draft legislation to recognise cryptocurrencies and NFTs as property, addressing legal challenges in the digital asset space. Additionally, the CME Group announced plans to launch micro Bitcoin and Ether futures in Euros next month, expanding crypto market access following the success of similar micro USD-denominated futures. 

Have a great trading week!

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