Bitfinex Weekly Briefing (0926-1002)
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Bitfinex Alpha | While Crypto Continues to Rally, Macro Environment Gets More Unfavorable
Macroeconomic indicators are looking very bleak, but things still look rosy for cryptocurrencies.
With the Federal Reserve raising rates last week, U.S. rates are now above the target long-term neutral inflation rate of 2.5%.
GDP growth is now expected to be just 0.2% in 2022, and will not return to the long-term target of 1.8% until 2025; likewise, unemployment is expected to rise to 4.4%, while inflation will only cool slowly. Meanwhile, interest rates are expected to rise to 4.4% by the end of the year.
House prices, a key component of GDP, are falling and buyers face the worst affordability in 40 years, with mortgage costs now accounting for 36% of household income, up from 21% a year ago.
Meanwhile, in Europe, the ECB appears to be on a similar path to the Fed. With the war in Ukraine and high energy prices driving up inflation, further hikes in borrowing costs are announced to rein in inflation, which looks set to tip many European countries into recession.
However, in cryptocurrencies, while bearish macro conditions have not gone unnoticed in terms of price, adoption is still growing.
Chainalysis has identified Central Asia, South Asia and Oceania (CSAO) as one of the top regions for receiving crypto payments and is growing the fastest – with the biggest entry being NFTs. In the second quarter of 2022, NFT-related websites received 58% of web traffic from CSAO IP addresses to cryptocurrency services; P2E blockchain games received another 21%.
More broadly, on-chain data suggests that many of those attracted to the price increases in 2020 and 2021 have stuck around, continuing to invest a significant portion of their capital in digital assets. Large, long-term cryptocurrency holders continue to hold in a bear market. So while their portfolios have lost value, those losses aren’t locked in because they didn’t sell — on-chain data suggests these holders are optimistic that the market will bounce back, keeping market fundamentals relatively healthy .
Since April 2022, the number of HODLers holding at least 0.1 BTC has also increased under bearish market conditions, which is different from the previous bear market data. This is all the more testament to the growth of retail investors and cryptocurrency adoption, even with macro conditions facing headwinds.
We also note that football has fueled new forces in the crypto space as the FIFA World Cup approaches. The FIFA Collect NFT marketplace built by Algorand has seen new user growth on the Algorand blockchain — a phenomenon that has been evident since the summer.
The percentage of supply held by ALGO whales (addresses with >1% supply) climbed sharply throughout August and September. Since August, whales have increased their aggregate holdings by over $280 million. Talk around the World Cup and football has found new outlets in cryptocurrencies.
On-chain crypto metrics also tell a consistent story about investor behavior. An analysis of Bitcoin’s realized price, which is the value of all Bitcoins at the time of purchase divided by the number of Bitcoins in circulation, suggests a realized price of $21,300 — meaning most participants are holding BTC at a loss.
This is backed up by the Spent Output Profit Rate (SOPR), a tool that allows you to track the overall profit and loss position across the market. By this measure, even whale-sized wallets are forced to realize losses in the current market.
Back in the news, we cover the Wintermute hack; the new Nasdaq crypto custody service; the SEC charges against a prominent crypto influencer; Public Opinion; White Hat Hacks on Ethereum Arbitration Bridge; EU Finalizes Crypto Asset Market Regulations; and Voyager’s Ongoing Bidding War.
https://blog.bitfinex.com/bitfinex-alpha/bitfinex-alpha-macro-headwinds-grow-stronger-though-crypto-growth-continues/
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Bitfinex Supports Cardano Vasil Hard Fork
We are pleased to announce that Bitfinex supports the Cardano (ADA) "Vasil" hard fork, a new version update for scaling and optimizing the Cardano blockchain.
Cardano (ADA) trading, deposits, and withdrawals on Bitfinex will not be affected as the new feature rolls out.
https://www.bitfinex.com/posts/842
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Bitfinex will support LUNC burning mechanism, LUNC withdrawal has been suspended
Previously, the Terra community passed two proposals introducing a 1.2% tax on all on-chain transactions on the Terra Classic network. The burning tax mechanism is designed to solve the supply problem of LUNC and reduce its supply to 10 billion.
https://www.bitfinex.com/posts/841
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Bitfinex Becomes Major 'Whale Sponsor' at 'Adopting Bitcoin' Conference in El Salvador
Bitfinex has announced it is the lead “whale” sponsor of the Adopting Bitcoin 2022 conference, to be held in El Salvador later this year, which will promote Bitcoin, the Lightning Network and their role in promoting financial freedom.
Held in San Salvador and Bitcoin Beach from November 15-17, the conference brought together the Bitcoin ecosystem and covered topics of collaboration, networking, and learning.
A highlight of the Adopt Bitcoin conference will be a keynote address on financial freedom by Bitfinex CTO Paolo Ardoino. Ardoino will outline his vision for Bitcoin and highlight how technologies such as the Lightning Network, Bitfinex Securities, Bitfinex Pay, and peer-to-peer (P2P) communication can increase financial and personal freedom.
From supporting educational programs and introducing new fintech innovations to promote the use of Bitcoin in everyday life, to tools designed to promote privacy and free speech, such as Keet, a P2P video conferencing and chat application, Bitfinex is looking to create a A freer and more decentralized world.
“I am delighted to be able to deliver the keynote address at the Adopting Bitcoin conference and convey our message of financial freedom,” said Paolo Ardoino, Bitfinex CTO. Trailblazers on how cryptocurrencies and decentralized ledgers and peer-to-peer technologies can accelerate financial literacy and inclusion. More importantly, these tools can lead to complete financial freedom.”
The first two days of the event will be held at the Crowne Plaza Convention Center in San Salvador. More than 110 speakers from more than 30 different countries will share the latest developments in the entire Bitcoin discipline as it relates to technology and economics. Notable speakers at the event included Mark Stevenson, Bitfinex Business Development Manager, Luis Pinedo, Bitfinex Product Manager, Federico Tenga, Bitcoin entrepreneur and advisor, and John Carvalho, CEO of Synonym.
A highlight of the technology and development-focused track will be a presentation by Bitcoin Core developer Jon Atack, while the economy-focused track will feature Mexican Senator Indira Kempis. The event will be conducted in English, with real-time Spanish translations available for the main stage.
Bitfinex was born at the beginning of the Bitcoin revolution and remains committed to realizing the "Satoshi Vision" of a permissionless peer-to-peer digital currency, tirelessly supporting the Lightning Network and further mass adoption at the national level,
https://blog.bitfinex.com/media-releases/bitfinex-whale-sponsor-at-adopting-bitcoin-conference-in-el-salvador/
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Sterling flounders as Bitcoin volume soars to record highs
https://www.reuters.com/markets/commodities/bitcoin-sterling-volumes-spike-record-high-british-currency-flounders-2022-09-28/
