Bitfinex v NYAG continues to be quite the summer potboiler.
One of our earlier editions discussed NYAG’s accusation that Bitfinex allegedly borrowed $850 million from Tether’s reserves to cover up the money that was owed to Bitfinex by a Panama-based crypto payments processor. The case reached a new high (touched new lows) in court yesterday. NYAG claims that Bitfinex defrauded its investors by not disclosing the alleged $850 million that it borrowed from USDT’s reserves. Every USDT is supposed to be backed by a US dollar held in a bank account so that every token is fully collateralized. Bitfinex claims that NYAG lacks the required legal jurisdiction to investigate Bitfinex as Bitfinex does not serve any NYC customers as per their terms and conditions. The battle came to a temporary halt when the judge decided to grant a 90-day extension period to resolve the case. This means that NYAG can continue its investigation on Bitfinex and Bitfinex can continue its operations, but cannot transfer funds from Tether to Bitfinex anymore.
After reaching a new high for the past 15 months, BTC’s volatility has started to retreat in the past few days. Bitfinex’s court hearing was expected to cause a lot of chaos in the market, but now that the court has granted a 90-day extension for the case, BTC prices are expected to operate in the narrow band of $9k-10k for a meaningful period of time. We expect this range-bound price behaviour to continue until the market starts pricing in the supply shortage post the block reward halvening event in May 2020.
The last two weeks in BTCUSD have been a round trip with a range of 11%. So while daily volatility is high with frequent 5%+ moves, weekly volatility has compressed. This usually is a sign of a market that’s digesting some moves, especially the last wave started in June that propelled the mkt to a new trading range. This time as well volumes have shrunk in this back and forth action which is normal.
On some of the metrics we like to follow, transactions have remained steady, fees have fallen.
Interestingly, top 100 addresses to total coin % has dramatically fallen over the weekend.
Active addresses has been declining over the month so could be signs of some lightening up in the whale wallets rather than an increase in accounts or smaller wallets.
The excellent Woobull charts here are showing some bullishness in the NVT ratio.
The NVT signal which we like more is showing signs of working off the overbought conditions from last month. This is more bullish longer term, shorter term probably indicates lower pricing but within the context of the past 4 weeks or so.