Representations of the virtual currency Bitcoin are seen in this image taken on March 13, 2020. REUTERS/Dado Ruvic/Illustration
Mar 29 – As a dismal first quarter draws to a close, crypto appears to have the wind in its sails. It has broken the $2 trillion mark and is proving surprisingly resilient amid global chaos.
At Monday’s high of $47,765, market leader Bitcoin broke through the tight $34,000 to $44,000 range in which it has traded for most of 2022. It has gained 18% by steadily climbing from a low just above $40,000 on March 21st.
Its relative stability, at least compared to historical levels, contrasts with stock markets, traditional currencies and even safe haven gold, which have been rocked by the Russian invasion of Ukraine and the US Federal Reserve’s tightening.
Bitcoin’s jitters have eased recently.
According to futures trading platform Coinglass, 30-day volatility is around 4%, about two-thirds of the June 2021 level. The highest this year was 4.56% on March 16.
This measures its deviation from its own standard levels, and Bitcoin has still had wild swings, like a 17% jump on March 1st. But it’s significantly tamer than it was in 2021, when it could move up to 40% in a day.
In comparison, the tech-heavy Nasdaq (.IXIC) is down 5-6% on numerous days in 2022 and was down 20% for the year through March 14 before rebounding to cut that loss in half.
“The biggest conflict we’ve seen in Europe since World War II really rocked global markets,” said Pierce Crosby, general manager of charting platform TradingView in New York.
“What we’ve seen in other major assets is a huge fallout — from both US equity markets and global markets,” he added. “Bitcoin has stayed more or less in a pretty tight range… but in terms of relative strength, it’s actually very bullish.”
$2 TRILLION CRYPTO
According to analytics platform CoinMarketCap, the total value of the cryptocurrency market surpassed $2 trillion on Friday. For comparison, the market briefly touched $3 trillion on Nov. 10 when Bitcoin hit $69,000.
The meandering climb back above $2 trillion has been slow, also helped by a mushroom explosion of coins and tokens – the number counted by CoinMarketCap has risen by almost 5,000 to 18,511 cryptocurrencies since November.
Bitcoin’s market cap has hit $902 billion, but it still has a long way to go to reclaim the $1 trillion it touted in November. While still the dominant crypto, its market share has also gradually dropped from as much as 70% of the total capitalization in early 2021 to 42% now.
Bitcoin dominance
WHAT’S AHEAD?
Many crypto investors have thought they could guess Bitcoin’s direction before the fickle cryptocurrency leaves them in the financial dust.
“Although Bitcoin remains strong in the short-term, rising oil prices are increasing the likelihood of a recession in the coming year or so,” said Marcus Sotiriou, an analyst at British digital asset brokerage GlobalBlock.
“Oil prices are up about 25% in the last six days alone, and bitcoin bulls will want to see that tail for further strength.”
However, certain other technical factors point to a Bitcoin bull market.
Funding rates, which measure the cost of holding Bitcoin via futures, have turned slightly positive after being negative for most of the year, suggesting investors are willing to pay to be long. It’s up 0.003% on analytics platform CryptoQuant, but it’s still down from a peak of 0.06% hit in October.
Coinglass’s longs-to-shorts ratio has also risen to 1.1 from 0.95 on March 20, its highest level in at least four weeks.
Blockchain data provider Chainalysis said an increasing share of Bitcoin — almost 60% of total supply — has been held for more than 52 weeks, up from 54.72% over the past 25 weeks.
However, Ashwath Balakrishnan, vice president of research at Delphi Digital in Bengaluru, warned that it is difficult to discern enduring market direction.
“Everyone’s a little cautious,” he said. “If (Bitcoin) rejects $46,000 and bounces back down, it likely means we’re stuck in range-bound conditions for at least another month or so.”
Reporting by Lisa Mattackal and Medha Singh in Bengaluru Editing by Vidya Ranganathan and Pravin Char
The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Trust Principles.