Bitfinex Alpha | BTC Enters Accumulation Period

After Bitcoin reached a new all-time high of $73,666 in March, Long-Term Holders (LTHs) sold substantial amounts of their BTC, leading to increased supply and a period of price correction and consolidation. This correction phase now appears to be nearing an end.

In the last two weeks,  Bitcoin ETFs have seen resurgent demand, recording net inflows of $136 million per day, exceeding the $32 million daily sell pressure from miners post-halving by more than four times. 

Added to that, exchange reserves of Bitcoin have been falling and new accumulation addresses, over the past month, have been increasing. We also see LTHs, who had sold significant portions of their holdings at the peak, are now re-accumulating Bitcoin for the first time since December 2023. This trend reflects long-term bullish sentiment among holders.

Solana’s DeFi ecosystem is also experiencing rapid growth, evident in its lending, liquid staking, and perpetual markets. Solana boasts a Total Value Locked (TVL) of $4.78 billion and NFT 24-hour trading volumes of $1.8 million. Additionally, Solana now leads in stablecoin transaction size among all blockchains. This resurgence in Solana is attributable to the advantages it offers over other blockchains in terms of transactions per second throughput and scalability. Both Solana and Ethereum continue to grow, but the rise in Solana is notable, and despite the fact that by TVL, Solana is four places behind Ethereum, it is second in terms of decentralised exchange volumes by chain, as more users find utility in its blockchain.

In the macro economy, we saw differing views on US consumer confidence, with the Conference Board reporting an unexpected increase while the University of Michigan’s sentiment index saw a sharp decrease. GDP growth for Q1, however,  was more clear, coming in below expectations at a revised rate of 1.3 percent, reflecting reduced consumer spending and lower inflation.

It is evident that high interest rates and reduced fiscal support are slowing consumer spending, and was also confirmed by a stabilisation of the April PCE price index, while personal saving rates remain stubbornly low. Potential rate cuts by the Fed are anticipated later in the year.

Last week also brought in a lot of positive developments in crypto news, starting with Tether committing up to $150 million to Bitcoin miner Bitdeer to expand its operations, strengthening its position in the mining sector. NYSE and CoinDesk Indices will launch cash-settled Bitcoin index options, enhancing digital asset offerings and risk management tools. Franklin Templeton, VanEck, and Invesco Galaxy are also preparing to launch spot Ether ETFs, pending SEC approval.

On the topic of ETFs, BlackRock’s iBIT has become the largest Bitcoin ETF, surpassing GBTC, with higher trading volumes and lower fees, attracting institutional investors.

Happy Trading!

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