Bitfinex alpha | Market losses increase as bulls hesitate

March 10th Bitfinex alpha | Market losses increase as bulls hesitate

After temporarily collecting the $90,000 level last week, Bitcoin is now in a new, more unstable range from $85,000 to $92,000 as it continues to overshadow the market. Prices earlier last week came with speculation about the US strategic Bitcoin Reserve and the White House Script Summit, but as news confirmed, traders took a “sell” approach and the market quickly wiped out profits. The options market also added to volatility last week, with $3 billion Bitcoin and Ethereum contracts expired last Friday, further driving price fluctuations.

The options showed that volatility surged above 80%, and instability increased as traders responded to changes in macroeconomic conditions. Implied volatility increased by 35.7% just before the summit as traders hedged positions. Nevertheless, on-chain data revealed that many traders discovered major losses last week, with losses across market participants reaching $888 million per day. While geopolitical and macroeconomic concerns still remain large overhangs, such widespread surrender often precedes market stabilization.

Bitcoin’s Used Production Profit Ratio (SOPR) is immersed in the territory of loss for the first time since October 2024, showing serious distress sales. The short-term holder SOPR recorded the second-largest negative print of this cycle at 0.95, indicating that new market participants are surrendering. Historically, SOPR above 1.0 measures more than signal re-accumulation and bullish continuation, but dilated debilitating below this level could suggest an even more negative aspect. If the bull market structure remains intact, buyers will start intervening at these levels, becoming a key metric that SOPR will monitor in the coming weeks.

However, current macroeconomic indicators do not point in a clear direction to advance. Data from the US job market, productivity and manufacturing sector is clearly mixed, offset by steady employment growth, wage growth, inflationary pressures, trade disruptions and careful business expansion. The US job market is resilient, with 151,000 jobs added in February, but government employment cuts have led to unemployment rates reaching up to 4.1%. Wage growth remains strong, but rising labor costs and inflationary pressures could challenge expectations of multiple Fed rate cuts this year.

Meanwhile, workers’ productivity rose 1.5% in the fourth quarter of 2024, helping businesses offset rising costs without expanding their labor force, but there remains a long-term risk if they are stagnant. Meanwhile, manufacturing is increasing concern about the sector’s ability to maintain growth amid trade uncertainty as new tariffs reduce production costs and slow new orders.

President Donald Trump is the establishment of a strategic Bitcoin Reserve, showing a historic shift towards consolidating over 187,000 BTC worth $13 billion and holding seized Bitcoin as domestic assets. His administration is also seeking stubcoin laws by August, aiming to end restrictive policies like Operation Choke Point 2.0, strengthening the US’s position as the world’s crypto leader. Trump’s strategic Bitcoin reserve plan allows the US to hold BTC as a long-term financial asset instead of selling it, which could impact global crypto policy.

Meanwhile, the SEC’s Cryptographic Task Force held a roundtable on March 21 to clarify the security status of digital assets, indicating a move towards more structured regulatory guidance. In Japan, the liberal Democrats implement crypto-tax reforms, reducing capital gains to 20%, and classifying disparities as different asset classes. The reform also proposes tax deferrals on equal tax treatment of crypto-to-crypto swaps and derivatives, facilitating digital asset investments.