Bitfinex report reveals optimism in Bitcoin metrics amid inflation moderation efforts

According to Bitfinex’s report, some but not all Bitcoin metrics are showing a similar optimism as the stock markets are showing following the many inflation interventions that have been made over the past few months.

The Federal Reserve Governor Philip Jefferson recently stated that the US central bank was committed to addressing high inflation while minimizing adverse effects on the US economy which has been weakening. There was a slight increase in jobless claims and lower GDP growth in March compounding the worries of a possible recession.

The possibility of a recession was further reflected in the “University of Michigan’s latest survey on consumer sentiment, which shows a decline in March – the first decrease in four months.”

Positive Bitcoin metrics

According to Bitfinex’s report, despite some pointers showing signs of a possible recession, “the Fed’s preferred inflation gauge, spending, as well as income data for February showed a cool down, suggesting that the Federal Reserve’s efforts to combat inflation are making progress.”

The stock market has benefitted the most from the inflation interventions and has made its third consecutive weekly gain with the likes of the Nasdaq Composite gaining more than 17% in Q1 2023. This is despite the banking crisis and the changing interest rate outlook.

Just like the stocks, some Bitcoin metrics have shown similar optimism. The report states that “non-zero balance addresses surged and hit a new record, but the number of active addresses and the number of daily transactions have experienced a fall. While this is not a bearish indicator, it suggests that amid range-trading conditions, the short-term market outlook is unsettling.”

On the other hand, Ether and BTC options open interest on the CME hit an all-time high indicating an increase in institutional activity. However, recent Bitcoin price performance shows a closer correlation with the S&P 500 raising concerns about increased price volatility and market stability.

Calls for caution against over-leveraging

Bitfinex goes ahead to state that the current market situation “calls for caution against over-leveraging or a heightened risk appetite during this transition period in the crypto market.”

The crypto market has seen several events over the past two weeks with the most recent being the CFTC filed a lawsuit against Binance, alleging multiple violations of the Commodity Exchange Act (CEA), including KYC and AML laws. The lawsuit has caused significant damage to Binance’s market share even if the CEO Changpeng Zhao has however denied the allegations.

There have also been new developments in regard to the FTX founder Sam Bankman-Fried case after bribery claims immerged.

However, on the positive side, Michael Saylor’s MicroStrategy continued its Bitcoin buying regime, increasing its holdings by 6,455 BTC. Tether’s USDT stablecoin dominance also surged in March 2023, reaching an all-time high of 57.5% of the total stablecoin market share. Lastly, there is the much-awaited Ethereum’s Shapella upgrade set for April 12, promising significant improvements to transaction processing, security, and network efficiency.

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