Bitfinex's analysis reveals sector-focused altcoin investment strategy and bullish sentiment towards Bitcoin amidst ETF inflows and halving anticipation.
Expressing his views to Crypto Briefing, Jag Kooner, the Head of Derivatives at Bitfinex, emphasized the importance of adopting a discerning and sector-specific investment approach within the altcoin market during the current price cycle.
Kooner observed a shift in capital flow from Bitcoin to altcoins, focusing on particular sectors such as the Solana ecosystem and AI-based projects. This marks a departure from previous cycles, where funds were more broadly distributed across various altcoins.
Discussing historical trends, Bitfinex’s Derivatives Head argued that the ongoing market movement aligns with a pre-halving rally, a pattern witnessed in previous Bitcoin cycles. Typically commencing about eight weeks before the halving event, this rally has the potential to drive prices beyond previous cycle highs. Notably, the past week witnessed Bitcoin's resurgence as a trillion-dollar asset, largely driven by ETF inflows.
“The decreasing selling pressure from GBTC and consistent inflows into other ETFs, averaging $300-400 million daily according to recent data, have been significant contributors. It’s important to note, however, that BTC today is already closer to its previous all-time high (ATH) before the pre-halving rally in comparison to previous cycles, partly due to ETF-related enthusiasm,” stated Kooner.
However, cautioning against strict reliance on historical patterns, Kooner emphasized the non-guarantee of their repetition in the dynamic crypto market.
Optimistic Bitfinex Analysis
The latest "Bitfinex Alpha" report from the crypto exchange's analysts highlighted a noteworthy surge in investor confidence in Bitcoin, evidenced by the cryptocurrency's price surge at the previous week's end.
This positive momentum is attributed, in part, to a slowdown in the sale of Grayscale’s GBTC funds and a substantial increase in overall crypto asset inflows. The holdings of recently established Bitcoin ETFs now surpass those of MicroStrategy, a major corporate supporter of Bitcoin, with expectations for sustained inflows.
Further boosting this trend is the anticipation of the 2024 Bitcoin halving event and the substantial percentage of BTC held by long-term investors, exceeding 70 percent of the total supply. These factors contribute to a highly optimistic outlook for Bitcoin’s price trajectory.
Backing this bullish sentiment, on-chain data, including the rise of the MVRV Ratio above its one-year Simple Moving Average, indicates an increasingly favorable environment for Bitcoin.
Moreover, the observed deceleration in the appreciation of the Short-Term Holder Realised Price metric suggests a decline in profit-taking activities, hinting at the market's anticipation of further growth potential for Bitcoin.