07 Apr Bitfinex Alpha | Macro Has Arrived but We Remain Positive on Q2

After last week’s relatively resilient performance, with BTC closing the week nearly flat, down just 0.65 percent—far outperforming traditional risk assets—it is clear that this was just a delayed downside response.

Despite the BTC/S&P 500 ratio surging to within five percent of all-time highs, indicating strong relative strength, markets have now sold off. We believe that equities are becoming deeply oversold and that a near-term relief rally could compress this spread in the medium-term. However, short-term funding and open interest trends also suggest incoming volatility for BTC. All that said, structurally the groundwork appears to be forming for outperformance later in Q2. As macro volatility cools, ETF inflows resume, and sovereign narratives re-emerge, Bitcoin may decouple further from equities and reclaim leadership across global risk assets.

The US economy posted stronger-than-expected job and construction figures in early 2025, offering short-term optimism. However, deeper structural challenges are emerging as newly implemented tariffs begin to weigh heavily on manufacturing, pricing, and labour markets. March’s job growth, led by the private service sector, masks potential instability, with manufacturing and goods-producing sectors showing signs of strain. 

Simultaneously, tariffs—now averaging over 22 percent—are raising input costs across industries, driving inflationary pressures and prompting retaliation from key trade partners. Construction spending rose in February due to easing mortgage rates, but cost inflation from materials like steel, aluminum, and lumber is already tightening affordability. Manufacturing activity has slipped back into contraction, and labour market indicators—especially job openings—point to a softening trend. While the Federal Reserve remains cautious amid uncertain inflation dynamics, the overall picture suggests that trade policy, not monetary policy, may be the bigger risk to economic momentum in the coming quarters.

In terms of newsflow, the industry continues to evolve positively. Japan is spearheading regulatory modernisation by proposing to classify cryptocurrencies as financial products and reduce tax rates on crypto gains to 20 percent, a move aimed at boosting investor participation and cementing the country’s role as a global crypto hub. Meanwhile, Grayscale has filed for a spot Solana ETF, signalling growing confidence in alternative Layer 1 assets and potentially paving the way for broader ETF adoption beyond Bitcoin and Ethereum. Complementing these developments, BlackRock’s on-chain BUIDL fund continues to dominate the tokenised treasury market, paying out $4.17 million in March dividends and capturing nearly 40 percent market share. These parallel advancements underscore the accelerating convergence of traditional finance with blockchain technology, pointing toward a maturing market infrastructure that’s increasingly accessible, compliant, and investor-friendly.