Altcoin investment is more 'selective and sector-focused', says Bitfinex’s Head of Derivatives

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Jag Kooner, Head of Derivatives at crypto exchange Bitfinex, said in a statement sent to Crypto Briefing that a “more selective and sector-focused investment strategy” in the altcoin market can be perceived in the current price cycle.

While there is money flowing from Bitcoin towards the altcoin market, Kooner assesses that the capital is being deployed in specific sectors, such as the Solana ecosystem and AI-based projects. This is different from previous cycles when money flowed to altcoins more broadly.

Speaking about previous cycles, Bitfinex’s Head of Derivatives defended that the current market movement aligns with a pre-halving rally, a trend observed in previous Bitcoin (BTC) cycles. Historically, this rally commences approximately eight weeks prior to the halving event and has the potential to push prices beyond previous cycle highs. Notably, the past week marked Bitcoin’s re-emergence as a trillion-dollar asset, largely driven by ETF inflows.

“The diminishing 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,” says Kooner.

However, while historical patterns may provide insights, it’s crucial to understand that they do not always guarantee repetition.

Bitfinex’s bullish report

In its “Bitfinex Alpha” report published this week, analysts at the crypto exchange pointed out that investor confidence in Bitcoin has seen a notable increase, as indicated by the cryptocurrency’s price rise at the end of the previous week.

This positive movement is attributed in part to a slowdown in the selling of Grayscale’s GBTC funds and a significant increase in total crypto asset inflows. The holdings of the newly established Bitcoin ETFs have now surpassed those of MicroStrategy, a major corporate backer of Bitcoin, with expectations for continued inflows.

This trend is further bolstered by the anticipation of the 2024 Bitcoin halving event and the high level of BTC that remains in the hands of long-term holders, which exceeds 70 percent of the total supply. Such factors contribute to a highly optimistic outlook for Bitcoin’s price trajectory.

Supporting this bullish sentiment, on-chain data, including the rise of the MVRV Ratio above its one-year Simple Moving Average, suggests a growingly favorable environment for Bitcoin.

Moreover, the observed slowdown in the appreciation of the Short-Term Holder Realised Price metric implies a reduction in profit-taking activities, suggesting that the market may anticipate further growth potential for Bitcoin.

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