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Bitfinex Alpha | Inflation subsides, but debt crisis looms amid Bitcoin consolidation
U.S. inflation has subsided but is facing an increasingly worrisome debt-ceiling crisis, and any weakening in market confidence could lead to higher interest rates. In addition, credit conditions for both U.S. businesses and households continue to tighten, which, combined with reduced demand for credit, is likely to prolong the constraints on overall credit supply.
Amid this, bitcoin prices have been sliding, but transaction fees remain high, driven by BRC-20-related activity. Increased transaction activity and higher transaction fees put pressure on other network activity indicators. Active addresses and new addresses interacting with the bitcoin network are approaching all-time lows, suggesting that higher transaction fees may dissuade other bitcoin network users. On the other hand, the Bitcoin Fee Ratio Multiple (FRM), the ratio of revenue miners receive from new Bitcoin issuance to transaction fees, has seen a sharp decline. This is also good for the health of the Bitcoin network, improves security, and indicates that the source of income for miners is shifting from Bitcoin issuance to transaction fees.
Bitcoin’s long-term indicators suggest that it may be on the cusp of an early bull market. All eight of Glassnode’s “Recovery from Bitcoin Bear Market” indicators are green, a strong bullish sign for the Bitcoin market. Bitcoin’s realized HODL multiple has been on an upward trajectory, despite some short-term indicators pointing to a pullback, but Bitcoin is still trading above key pricing models.
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