Bitfinex alpha | BTC integrates as volatility decreases

January 27th Bitfinex alpha | BTC integrates as volatility decreases

Bitcoin reached a new $109,590 ATH on January 20th, driven by President Donald Trump’s inauguration and the expected emergence of a more crypto-friendly policy in the United States. Expectations for initiatives such as strategic Bitcoin reserves and increased regulatory clarity have fueled speculative purchases. However, Bitcoin struggled to maintain momentum, retreating to a previous ATH less than $108,100 deal, and is now below $100,000. There is growing concern over the ongoing threat of competition in China on AI and the new US administration’s tariff hikes.

The correlation between Bitcoin and the S&P 500 and Nasdaq has reached highs up until the New Year, highlighting Bitcoin’s evolving position as a major risk-on asset. However, while the S&P 500 was tied to a new high last week, Bitcoin remains vulnerable to news agendas, liquidity and speculation.

Bitcoin, S&P500 and NASDAQ 30-day Rolling Pearson correlation.

Like several other stock markets, BTC responded cautiously following the Bank of Japan rate hike last week, continuing to correlate closely with stocks, falling sharply on January 27th, increasing on the ability of jitter to produce cheap AI models through deep seeks and the threat of tariffs imposed on Colombia. Bitcoin options imply that volatility declined by 13% over the week, suggesting that traders are not expecting a rise in price action.

In the macroeconomics, despite a slight increase in unemployment claims, labor market conditions remained stable, with continued claims reaching their highest levels in over three years. Meanwhile, after six months of continuous improvement, consumer sentiment has declined. Concerns over rising unemployment and inflation, affected by high import duties and expectations of change in regulations under President Trump, weighs heavily on family trust. Inflation expectations are rising, reflecting broader concerns about the impact on prices from the new policy.

S&P Global US Flash PMI (Purchase Manager Index)

Economic activity continues to grow and is easing. S&P Global Flash US PMI reported that service growth is slowing, even as manufacturing saw its first expansion in months. Inflationary pressures remain a focus for businesses exacerbated by uncertainties about trade and immigration policies.

There have been significant developments across the cryptocurrency industry, including a surge in ETF submissions for Litecoin, XRP and Solana, reflecting the growing institutional interest. At the same time, the U.S. House Oversight Committee launched an investigation into claims of unfair defiling practices targeting cryptography-related entities. But on another side, Fintrac has issued an alert about roles that Crypto appears to still play in money laundering. In this case, revenue from the sales of synthetic opioids. They are urging financial institutions to implement stronger anti-money laundering measures.