Welcome to our latest edition of the Epic Mining Market Update, where we give you the highlights on what is reshaping the financial landscape.The last month price movement has been largely fueled by the spot Exchange-Traded Funds. These developments are drawing keen interest from a broad spectrum of professionals. Today we will inform you on everything you need to know about the latest developments!
Summary:
- In January, the year-over-year CPI increase was around 3.1%, exceeding the Fed’s 2% target.
- Eurozone experienced a peak inflation of 10.6%, with current rates around 2.8%.
- U.S. inflation peaked at 9.1%, currently at 3.1%.
- Market anticipates unchanged interest rates for the next FOMC meeting.
- Significant shift in BTC distribution among issuers post-ETF approval.
- Total Bitcoin held in ETFs is now 287K, with BlackRock being the largest shareholder.
- Over $4.8 billion influx into ETFs, total BTC in ETFs is 720,000.
- Bitcoin surpassed $50k, signaling a bullish trend pre-halving.
- ETH/BTC ratio downtrend indicates Bitcoin’s superiority over Ethereum.
- The high percentage of supply in profit
- Pi-cycle suggests more growth potential for Bitcoin
Bi-Weekly Market Changes
10 – 02 / 25 – 02
News
Inflation Rate in Europe and the US Is Stabelizing
In our last edition, we delved into the FEDs interest rates. This time, let’s explore the current state of inflation.
The Consumer Price Index (CPI), despite its widespread use, isn’t a flawless tool for measuring changes in an economy’s pricing dynamics. As Michael Saylor puts it, “Inflation is a vector.” Prices of various goods respond differently to alterations in money supply, and the basket of goods CPI measures might not accurately reflect the typical American’s spending patterns.
Nonetheless, the Federal Reserve relies on CPI as a key indicator of inflation. January’s year-over-year CPI increase registered around 3.1%, persistently exceeding the Fed’s 2% target. This inflation rate has once again adjusted expectations regarding Federal Funds Rate cuts, now anticipated to start no sooner than the June Fed meeting. Currently, the CPI stands at 3.1%, as illustrated in the graph below.
Shifting our focus to Europe, we observe similar trends to those in the U.S., albeit with lower inflation rates. The Eurozone experienced a peak inflation of 10.6%, compared to the U.S.’s peak at 9.1%. Presently, the Eurozone’s inflation rate hovers around 2.8%, having previously dipped to 2.4%, while the U.S. sits at 3.1%, with its lowest point at 3.0%.
This data raises the question: Will the American central bank soon reduce interest rates? Not immediately, as previously discussed. Inflation can rebound unexpectedly, so it’s crucial not to relax monetary policies prematurely, risking destabilization. Remember, inflation invariably impacts those who don’t control the money supply.
Current market sentiment anticipates unchanged interest rates for the next Federal Open Market Committee (FOMC) meeting on March 20th, with 96% expecting no change, as the graph below shows.
Looking ahead to the May 10th meeting, 74% predict steady rates, while 26% foresee a reduction. No one anticipates an increase. These projections are based on current data, but with new information emerging before the May meeting, perspectives will shift. Thus, one should cautiously interpret these projections.
The key takeaway? The market currently exhibits a positive outlook, likely influencing all asset classes favorably. Inflation, a constant economic factor, typically erodes asset value. Therefore, for those seeking to safeguard their assets, maintaining a long-term investment in Bitcoin could be a wise strategy.
Bitcoin ETF’s Keep Increasing
We’ve observed a significant shift in BTC distribution among issuers following the approval of these ETFs. Grayscale has experienced notable outflows, while newly approved ETFs are seeing substantial inflows. This trend is largely attributed to the lower fees offered by the new ETFs – a large contrast to Grayscale’s Bitcoin Trust (GBTC), which charges a 1.5% fee. For instance, Fidelity and BlackRock have set their fees at a mere 0.25%, even offering fee waivers or reductions during the initial period.
Another factor influencing this shift is the liquidation actions by major GBTC holders. For example, FTX offloaded approximately $1 billion worth of GBTC, and similar moves were made by Digital Currency Group’s Genesis investments. Despite these outflows, the overall picture remains bullish.
The total holding of Bitcoin in an ETF is now 287 K. With BlackRock as largest shareholder. As shown in the graph below.
Since the official launch of the ETFs, there’s been an influx of over $4.8 billion, with a whopping $37 billion absorbed by exchange-traded products. The graph below shows the inflow of BTC going in to ETF’s. Which is around 113k BTC which have flowed into ETFs since the 11th of January. This number is lower than the number 287,347 in the above graph, because the flow from BTC from grayscale into other ETFs is excluded. The total number of BTC in an ETFs at the moment is an astonishing 720.000 Bitcoins.
What does this mean for Bitcoin and its investors? The arrival of ETFs has opened up new avenues for investment in Bitcoin. Causing a significant increase in the total capital flowing into the Bitcoin market. The reduced fees of these ETFs make them more attractive compared to traditional products like GBTC. Also the introduction of the ETF makes it possible for other ETFs to include Bitcoin in their basket like we saw with the Conservative ETF from Fidelity. As Bitcoin continues to gain mainstream acceptance and trust, these trends in ETFs will grow the market.
Technical Analysis
Bitcoin Surpasses $50k: Pre-Halving Bull Run Signals Large Potential
Bitcoin has surpassed the $50k mark, and this is before the halving event has even occurred! This is a significant bullish signal for what’s to come after the halving, as Bitcoin becomes even scarcer. We’ve observed a beautiful bounce off the 100-day moving average (the orange line), using it as support, and now we are facing $52.5k as resistance.
The Relative Strength Index (RSI) is in an overheated area, and many people are currently in profit (which will be discussed later in the chain analysis section). This means that a pullback in Bitcoin’s price wouldn’t be surprising. In this scenario, “buy the dip” seems like sound advice because there is substantial room for growth.
ETH Vs. BTC: BTC Wins
It’s always nice to know if you’ve invested in the best assets. Bitcoin is followed by Ethereum as the second largest crypto currency. Over the past two years, we’ve observed a downtrend in the ETH/BTC price ratio. This indicates that Bitcoin has gained more value compared to Ethereum during this period. To be precise, Bitcoin’s value increased by 30% more than Ethereum’s. Congratulations to all the Bitcoin miners – you made the right decision!
After finding support at approximately 0.05, Ethereum’s value in Bitcoin terms has shown a rebound, attempting to reverse its post-merge downtrend. Retail market participants are eagerly anticipating the approval of an Ethereum ETF. However, this is a far more complex proposition than a Bitcoin ETF, due to the significantly different decentralization profiles of the two assets. Considering the continuous inflows into BTC from institutional investors, it seems unlikely that Ethereum will surpass Bitcoin in growth.
Chain Analysis
Percentage of Supply in Profit: Short-Term Predictions
The number of people in profit is a valuable indicator for short-term market predictions. The logic behind it is quite straightforward. If most people are in a loss, a massive sell-off is unlikely, as they are already experiencing losses. Conversely, if most people are in profit, it’s more probable that they will start taking profits. This isn’t rocket science but a simple market dynamic.
We are currently approaching a high percentage of people in profit. The markets are balancing themselves. When too many people are in profit, selling eventually begins. Bitcoin has seen significant growth in recent months. Caution is advised as some investors may start to take profits. However, long-term holders need not worry. Any price drop should be viewed as an opportunity to accumulate more at a discount.
The Pi-cycle Indicator Forecasts More Growing Room to Come
The Pi-cycle has historically been a reliable indicator for predicting market tops. It determines whether a market is overheated or not, based on some underlying mathematical principles that we won’t delve into here. As shown in the graph below, once the Pi-cycle lines converge, we can typically anticipate a drop in price.
At present, this convergence has not occurred, suggesting that even though the previous graph indicates a potential sell-off of Bitcoin, the major trend is sure to continue upward. Therefore, any drop in price should be considered a buying opportunity.
We wish you a good week and keep those mining rigs running!
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