USD 11 Billion Bitcoin Liquidity Set To Increase Market Stability
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Today we’re looking at something a little bit different in the fact that as we raise previously this bitcoin Halving would be a lot different due to the increase in mainstream investment brought on by the Bitcoin-ETFs. While it is still too early to adequately address, we can see some slight differences in the fact that the market is remaining relatively stable with Bitcoin showing some signs of growth.
But there are some future issues in the pipeworks that people should be aware of that could cause a dip and that’s to do with the USD 2 Billion worth of Altcoins that are becoming available for sale as well as the recent announcement by FTX that they will be refunding their customers. The kicker is that crypto currency has increased 250% since the 2022 collapse, but investors won’t be getting any increases on their assets just refunded their initial losses. A move that has seen many investors wanting to challenge the decision.
But before we go onto that, let’s take a look at the current stability and what we think might happen over the next few months. Fingers crossed we all see GREEN!
Stability Act
The crypto market has been experiencing a period of stability following the recent Bitcoin halving with prices hovering around the USD 61,000 mark. This stability is not only reflected in Bitcoin's price but also in the futures market where consistent open interest and increased crypto margin usage are anticipated if this stability persists. However, amidst this stability lies a potential challenge posed by the unlocking of staked altcoins in the coming months.
Bitcoin futures have experienced a fluctuating Open Interest (OI) at the beginning of 2023 they reached new peaks alongside Bitcoin's surge to a new all time high of USD 71,400 in March. As Bitcoin prices stabilized around USD 61,000. The futures market began to mirror this trend indicating a shift in trader behaviours towards leverage and a preference for crypto margined futures.
The volatility risk premium (VRP) a key indicator that signals market stability has collapsed since the halving suggesting a period of relatively low volatility ahead. This collapse in VRP reflects a realignment of market expectations towards a more stable and predictable environment post halving.
This is a completely new experience for Bitcoin whom in previous halving events we saw massive declines in it’s value leading to price instability and volatility. But this now appears to be completely different. Although it is still too early to tell. Traders and investors do perceive a reduced uncertainty which is leading to a more optimistic outlook for future market conditions.
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Volatile Risk Premium: Ethereum In Danger
While Bitcoin's VRP has significantly declined indicating a stable post halving market Ethereum's VRP has a different outlook and remains relatively elevated compared to Bitcoin. This suggests that traders perceive Ethereum's future as relatively uncertain. This could be possibly due to pending decisions by regulatory bodies such as the U.S. Securities and Exchange Commission regarding spot ether exchange traded funds.
Despite the overall stability in the crypto market concerns arise from the unlocking of staked altcoins worth billions of dollars over the next few months. Large token unlocks typically increase the supply of altcoins by distributing assets previously locked up in vesting contracts. This influx of supply could potentially lower the market for altcoins, especially those with positive momentum, as venture capital investors may seek to capitalize on recent gains.
Additionally over USD 11 billion worth of Bitcoin is set to be distributed to creditors of crypto exchanges and long defunct marketplaces. This distribution of funds could inject liquidity back into the market offering some relief amidst the unlocking of altcoins. However, market observers warn of potential waves of fear, uncertainty, and doubt (FUD) surrounding these supply events.
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Volatility Ahead
While the crypto market enjoys a period of stability post halving for the first time, the unlocking of staked altcoins and the distribution of Bitcoin to creditors present a potential challenge in the coming months. Considering their impact on market needs to occur but despite these challenges the overall sentiment remains optimistic, with hopes that the market will weather these storms and continue on its path towards maturity and growth.
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Posted Using InLeo Alpha