March 18 Bitfinex Alpha | Bitcoin ETF Flows Moderate, But Altcoins Not Losing Their Shine
After hitting a new all-time high of $73,666 on March 14, Bitcoin saw a withdrawal by more than 12.5%, in what was one of the largest price declines since the launch of spot Bitcoin ETFs in early January. As Spot Bitcoin ETFs saw unprecedented inflows, surpassing $1 billion in a single day last week, recent stabilization of flows gave the market some pause. It would not be surprising to now see the market seeking some equilibrium after the initial enthusiasm we saw. Flow data in the coming week will be crucial in shedding light on TradFi investor sentiment towards Bitcoin, and particularly their reaction to last week's sharp corrections.
In contrast, the altcoin market has shown remarkable composure in the face of Bitcoin's volatility. The Total3 index reached a new cycle high, indicating increasing investment flows into alts. This resilience is reflected in the substantial inflows to Ethereum and other layer 1 (L1) blockchain projects, despite Ether's disappointing performance relative to BTC.
There is, however, a increasingly optimistic story for Ether and Ethereum, as evidenced by record ETH outflows from exchanges, as well as the growing popularity and valuation of layer 2 ecosystems like Base, which have seen their total value locked (TVL) double in recent weeks. Going forward, the performance of large-cap altcoins, especially those with their own ecosystems, will be crucial to understanding market direction.
In the macroeconomic world, February's Consumer Price Index (CPI) report delivered a blow to hopes for a rapid easing of monetary policy in the United States, with a 0.4 percent increase in the CPI signaling continued inflationary pressures, particularly on gasoline and housing costs.
However, retail sales in February provided a glimmer of hope, showing that the consumer is not insensitive to high interest rates. A 0.6 percent increase suggests robust consumer spending, supported by a strong labor market. However, persistent inflationary pressures, as evidenced by rising producer prices and robust services spending, mean the Fed must remain cautious and avoid cutting interest rates too soon.
In the crypto world, a British court has presided over a landmark legal ruling regarding Craig Wright's claim to be Satoshi Nakamoto, the pseudonymous creator of Bitcoin. This decision not only clarifies Wright's non-involvement in the creation of Bitcoin also has significant implications for his ongoing legal battles within the cryptocurrency community.
Meanwhile in Thailand, regulatory changes have opened the door for institutional investors and “high net worth individuals” to access private funds investing in spot Bitcoin ETFs in the United States, classifying these stocks as securities. While the move demonstrates Thailand's progressive stance towards integrating digital assets into its financial ecosystem, it simultaneously highlights the challenges faced by retail investors in accessing emerging investment opportunities in the digital asset space. .
Have a good trading week!