In its latest report, Bitfinex puts cryptos in check between bear market and economic crisis in the US.
The Bitfinex platform released the latest edition of Bitfinex Alpha, a report that accounts for the current state of the cryptocurrency market. “On the crypto front, we are seeing that despite the pessimism, the creativity and energy of the crypto market has not diminished.”, begins the report that later establishes a position on inflation in the US where they affirm that from the consumer inflation data, the recession “It is no longer a question of whether or not we will enter, but how deep and how wide it will be.”. From Bitfinex they affirm that although users “have faced forced liquidations and remain heavily submerged in unrealized loss positions“the cryptocurrency market”still offers significant investment opportunities”. One of the most curious data in this regard is that of NFTs. “More than 10,000 new wallets are buying their first NFT every day on Ethereum, and this blockchain is near an all-time high for NFT projects with more than 10 sales per week.”, they stated from Bitfinex.
- Bitfinex donates 36 BTC to Salvadoran companies to support economic development
The Bitfinex report also emphasized the position of the miners during this fall. For the report, miners have behaved procyclically. “They accumulate Bitcoin during a bull market and buy more mining equipment. However, there is a delay between their purchase date and the time they are turned on, for various reasons such as late delivery and installation scaling costs. As a result, historically, hash rate spike has followed bitcoin price spike”, they explained from Bitfinex.
The report warns that due to the incursion of new mining equipment and the falling price of bitcoin, miners’ margins are reduced. “This effect is playing out right now, as machines have continued to be added at an aggressive pace through early 2022, but the bitcoin spot price is down roughly 70%”, they explained from Bitfinex. On the other hand, the report speaks of one more variable in the reduction of miners’ margins, which is the rising energy costs due to supply chain issues at the end of 2021 and the first quarter of 2022.
- From Bitfinex they affirm that bitcoin has been reinforced
From a financial point of view, the Bitfinex analysis looked at on-chain data from wallets. From these data, he concluded that long-term holders have a 32% loss currently. As a point of comparison, Bitfinex explains that in 2018 the losses of the holders were lower. “When the cryptocurrency market capitulates, assets are transferred to new buyers or short-term holders. However, there will be a gradual increase in long-term hodlers as retail buyers are pushed out of the market. As mentioned above, the formation of a fund is characterized by the transfer of assets from low-conviction holders to high-conviction holders.”, they expressed from Bitfinex.
Where did the crypto money go?
The Bitfinex report explains that investment capital flows also fell. “The amount of venture capital invested in the blockchain industry fell by nearly 22%, from $12.5 billion to $9.8 billion quarter over quarter. Investment in the sector increased for seven consecutive quarters before this fall”, explained the report. In this sense, the report made it explicit that the DeFi sector was the one that suffered the most from the fall. For Bitfinex, “since mid-June, the cryptocurrency market formally entered a second phase of the bear market, characterized by insolvency and institutional liquidation”.
- According to Bitfinex analysts, cryptocurrencies will become a major market
Bitfinex concludes the report with a somber statement: “The market has received a second hit in asset prices as a result of the liquidation and auction of institutional assets, the wave of divestments caused by the loss of investor confidence and the collapse of institutions”.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
It may interest you:
- According to Bitfinex analysts, cryptocurrencies will become a major market
- From Bitfinex they affirm that bitcoin has been reinforced
- Bitfinex donates 36 BTC to Salvadoran companies to support economic development
- Circle’s chief strategy officer lays out the political principles of stablecoins in the US.
- Data points to a bottom for Bitcoin, but a metric warns of a final drop to $14,000
- 3AC liquidators ask for time and access to headquarters as Genesis and Algorand ties are unraveled
- Cosmoverse 2022: new speakers announced and tickets are already on sale