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Bitfinex Alpha | BTC Price Holds Steady, Sharp Increase in On-Chain Activity
There is a stark discrepancy between the Fed's policy indications and the market's forecasts for monetary policy. The Fed raised interest rates by 25 basis points last week, bringing the federal funds rate to a range of 5-5.25%. The Fed warned that while a pause in rate hikes was possible, it would not hesitate to raise rates again if inflation did not subside sufficiently.
However, the market is pricing in as much as 75 basis points of rate cuts by the end of the year. Asset prices may be more stable than they should be, despite clear concerns about parts of the banking sector and recent data pointing to a weak labor market.
Markets seem confident the Fed will continue to successfully steer the economy despite its own indications that tougher action may be in order if inflation does not subside. The introduction of emergency lending facilities and the looming 2024 presidential election have given some confidence that the banking sector will remain stable and that the Fed itself will be under pressure to maintain a healthy job market.
U.S. job vacancies fell for a third straight month in March and layoffs rose to their highest level in more than two years as year-long austerity measures took effect, helping the Fed's continued fight against inflation. However, U.S. manufacturing also continued to contract, with the latest data marking the sixth straight month of decline in manufacturing activity. Factors such as weak demand, excess inventory and shifting consumer spending patterns contributed to the drop in prices.
Like traditional markets, the crypto market has been stable, although bullish indicators abound.
Bitcoin network transaction fees have reached 2-year highs amid market enthusiasm for meme altcoins and an increase in BRC-20 token transactions. The BRC-20 token standard, similar to ethereum's ERC-20, has quickly gained traction since its launch in March.
Bitcoin network statistics also hit record highs, with more than 680,000 daily Bitcoin transactions surpassing previous records set during the bull market in 2017 and 2021.
In addition, the hash rate of the Bitcoin network has reached an all-time high of 420 per second, which shows that miners are confident in the future value of Bitcoin, and the number of BTC addresses with non-zero balances has also reached an all-time high of 46 million.
In addition to the bullish sentiment we are seeing for BTC, market volatility is likely to subside in the short term. After the Fed raised interest rates last week, liquidations were very low at $34 million, while funding rates remained largely neutral. Additionally, the 25% delta deviation for BTC options with 7-day to 180-day maturities is mostly close to zero, suggesting that investors are not paying a premium for put or call options.
However, historical trends suggest that this calm market scenario will not last for long. Liquidation-induced volatility is expected soon, potentially extending Bitcoin’s year-to-date uptrend. An overbalance between bulls and bears will always lead to one side quickly establishing an advantage.
The usually reliable MVRV (Market Value at Realized Value) score metric also supports the bullish thesis. It currently has an assessment score of 0.7 and hasn't been affected much by the price pullback after its recent break above $30,000, suggesting investors are still more likely to buy and accumulate BTC.
Last week, Cross River Bank, known for serving fintech and cryptocurrency clients, received a cease and desist order from the FDIC for alleged violations of fair lending practices, an order the bank claims will not have a significant impact on user growth.
MicroStrategy reported net income of $461 million thanks to a one-time tax benefit from rising bitcoin prices, and the company now holds 140,000 BTC, with shares up 118% this year.
A lawsuit accuses Coinbase executives of insider trading that prevented $1 billion in stock losses. Coinbase has so far dismissed the claims as "boring."
Finally, the White House proposed a new digital asset mining energy tax on crypto mining, seeking to levy 30% of mining companies’ energy costs. The tax could raise as much as $3.5 billion in revenue over a decade. The IRS also plans to release new crypto tax guidance next year and seek feedback on proposals to tax NFTs as collectibles.
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Bitfinex Alpha Special Edition | A Deep Dive into the BRC-20 Token Standard
The BRC-20 token standard has gained attention and popularity due to the recent craze for meme tokens. According to brc-20.io, the market cap of the BRC-20 token has now reached $858,775,461.
The BRC-20 token standard was designed specifically for the Bitcoin blockchain and was created using the Ordinals protocol, providing users with a unique way of sending and receiving tokens on the Bitcoin blockchain that is deceptively secure and fungible, This was not possible before.
Status of BRC-20
Since its launch, the BRC-20 token standard has grown rapidly, with more than 14,000 tokens issued. Some of the most popular tokens include ORDI, PIZA, PEPE, and MEME. The popularity of these tokens highlights the potential of the BRC-20 token standard and the Ordinals protocol.
Use Cases for BRC-20
The BRC-20 network does not support smart contracts, and the price of issued tokens is almost entirely dependent on market speculation. Therefore, it is difficult to form a view on the future direction of such tokens, because their 24-hour trading volume is less than 30% of the total market capitalization, as is currently the case with ORDI. While many cryptocurrency projects started this way, and we have seen DOGE sustain very high market caps through inflation models and limited use cases, there is still very little room for a class of tokens based solely on speculation. It’s hard for any analyst to imagine that this rally in BRC-20 tokens will last unless more builds are made on the protocol with real use cases.
BRC-20 Current Issues
While the BRC-20 token standard is secure and fungible, it has some limitations that may limit its adoption in the long run, an important limitation being its lack of EVM compatibility. BRC-20 tokens do not support smart contracts, which limits the ecosystem and adoption. Developers cannot access the network or build resources on it, which can lead to a more miniaturized ecosystem and limit its adoption.
Another problem with BRC-20 tokens is that they consume valuable Bitcoin block space. Network congestion can lead to increased gas fees on the network, making it more expensive to send and receive tokens. But the security of the Bitcoin blockchain is top-notch, and its proof-of-work mechanism makes it difficult for attackers to penetrate, ensuring that users enjoy the best token transfer experience on the blockchain.
Future predictions for BRC-20
While the topic is still exciting, BRC-20 is still a ways off from being on par with competitors like ERC-20 or BSC BEP-20.
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Bitfinex Supports CryptoGPT (GPT) Renamed to LayerAI (LAI)
Bitfinex will support the rebranding of CryptoGPT (GPT) to LayerAI (LAI) on May 17, 2023 at 11AM UTC. CryptoGPT (GPT) transactions, deposits and withdrawals on Bitfinex will stop at 11:00 am (UTC time) on May 16, 2023, please cancel any open orders with CryptoGPT (GPT) before then, the system will Cancel any remaining open orders.
