March 25 Bitfinex Alpha | Moderate ETF Flows and Local Bottom for BTC Established
As the market begins to recover after a sharp correction early last week, we have focused on the low point of the current trading range. We believe that Bitcoin's pullback last week from its current all-time high of $73,666, and amounting to a correction of approximately 17.5%, suggests that we are on the verge of establishing a local background – and it may already be done.
Looking at the pattern of corrections we have seen since BTC bottomed in November 2022 shows that corrections generally do not exceed 20-24% and we expect the current cycle. will not be different.
We also do not view the state of flows into spot Bitcoin ETFs as a cause for concern. Even if ETF outflows are negative featured last weekall of this comes from the Grayscale Bitcoin Trust (GBTC) as investors abandon both the higher fees demanded by GBTC and To take advantage of, especially since many of these investors are long-term holders who entered during the bear market. We would only be concerned if negative flows from GBTC started to be reflected in new ETFs like Blackrock's IBIT and Fidelity's FBTC.
GBTC investors are not the only sellers in the market. Whale portfolio activities also indicated significant profit taking, validated by the fact that the spent profit ratio (SOPR) for long-term holders is firmly in profit territory. The absence of any movement in the realized price for long-term holders also shows that there has been no significant BTC purchases by this cohort since the beginning of February.
Our analysis indicates that in the current market, the floor for BTC is around $56,000, as it is both just above the Price realized for the short-term holder cohort, and is also the estimate cost basis for ETF investors. A drop to $56,000 would also be the maximum decline we would expect from a new local high, amounting to around 23-24 percent – which is consistent with our previous analysis of corrections from highers. bottom of the market.
Across the macroeconomy, the U.S. housing market shows signs of improvementas evidenced by a substantial increase in housing starts, raising hopes of a more balanced market, potentially easing the burden of housing inflation, a notable factor contributing to broader inflationary trends.
Further bolstering the outlook for the housing sector, the National Association of Realtors reported a significant increase in existing home sales. However, this positive trend is counterbalanced by the reduction in the stock of available housing. The limited supply of existing housing, along with the rise in new housing construction, underscores continued market pressure on housing and indicates that new construction alone may not be enough to relieve pressure on the housing market.
The Fed, however, indicated that it anticipated three reductions in key rates this year, and that despite the recent surge in inflation, the central narrative remains that of a gradual reduction in inflation towards the 2% target, albeit on an uneven trajectory.
Commercial activity in the United States has remained stableeven as there has been an increase in input and output costs, further highlighting the Fed's complex challenge of managing inflation risks and engineering a soft landing.
In the crypto-sphere, the The SEC continues to delay ETF applications for ETH spot products, because it intensifies his control on Ether and the question of whether ETH should be classified as a security. Continued uncertainty has led to a widening of the Grayscale Ethereum Trust discount to 20 percentits lowest since November 2023.
On the brighter side, BlackRock launched BUIDL, its first fund of tokenized assets on the Ethereum network. This launch marks a significant milestone in BlackRock's digital assets strategy, providing qualified investors with a new way to earn US dollar returns through blockchain technology, ensuring greater accessibility and transparency of on-chain offerings.
Have a good trading week!