16 Oct Bitfinex Alpha | Spot trading leads market momentum as geopolitical tensions escalate
The Bitcoin market is currently experiencing a pronounced tilt towards spot trading. Long-term investors now hold a record 80.34 percent of the total supply, equating to around 15 million BTC while short-term holders account for a mere 19.34 percent of the circulating supply. Additionally, the majority of coins moving on-chain aren’t seeing any notable profit or loss suggesting that the market is in a transitory state.
The futures market has seen a surge in open interest (OI) for assets like BTC and Ether, with the current aggregated OI for BTC across all centralised exchanges standing at over $8.7 billion. Concurrently, spot volumes on centralised exchanges are at multi-year lows, and the estimated leverage ratio has surged, indicating that traders are leaning more heavily on borrowed funds, potentially spelling higher market risk.
Geopolitical tensions have sent ripples through the global financial markets. Gold, a traditional safe haven, witnessed an uptick, while Bitcoin’s response was more muted. The options market is in a discernible tilt towards downside protection. The surge in caution, reflected in the lack of IV increase, is indicative of increased hedging, especially amidst escalating geopolitical tensions. The put/call ratio has increased, and long-dated calls for December end expiry have seen a surge in open interest.
The past week has been busy from a macroeconomic perspective with the recent conflict between Hamas and Israel, while geographically distant from US shores, sending shockwaves through global oil markets. October 9th marked a four percent spike in oil prices, underscoring the fragility of the energy supply chain predicting a ripple effect on energy prices and, in turn, on the wallets of American consumers.
However, it’s not just global events that are causing economic ripples; inflationary pressures are also on the rise. The US experienced an unexpected uptick in producer and consumer inflation in September. raising questions about the impact of inflationary trend on the purchasing power of everyday Americans.
Consumer sentiment, a crucial indicator of economic health, took a hit in October. Preliminary data from the University of Michigan Survey showed that consumer confidence dropped to its lowest point since May. As the central bank gears up for its upcoming November meeting, it faces the delicate task of managing inflation while supporting economic growth.
Paolo Ardoino, has stepped into the role of CEO at Tether. This is seen as a strategic move to propel Tether towards greater growth and global expansion. Meanwhile, The SEC chose not to appeal a court ruling, which directed them to reconsider Grayscale Investments’ application for a Bitcoin Exchange-Traded Fund (ETF) which sparked optimism in the crypto-sphere. On the international stage, the Group of Twenty (G20) presented a united front by unanimously endorsing the “G20 Finance Ministers and Central Bank Governors Communique.” This landmark endorsement indicates a shared commitment among G20 member nations to adopt a coordinated approach to cryptocurrency regulation.
Across the Atlantic, the European Securities and Markets Authority (ESMA) issued a report that emphasised significant concerns surrounding Decentralized Finance (DeFi). This has been a source of significant concerns amongst the crypto community which fear for decentralised architecture and digital identities lacking privacy in this region moving forward.
