Any extreme March volatility, however, is temporary when it comes to $1 trillion cryptocurrency’s longer-term uptrend, says Delphi Digital.
The price of Bitcoin is enjoying an uptrend, marking a positive start to the week. Trading above $54,000, BTC price is just 8% away from its all-time high of $58,300.
While the leading digital currency has recovered from the losses, the market isn’t confident yet that it is all over for bears, given that it is March which has been a historically bearish month for Bitcoin’s price.
Also, 100k Bitcoin options are outstanding for the March expiry, which points to continued volatility.
As Delphi Digital says, “Beware the Ides of March,” which refers to Roman, who considered it to be a deadline for settling debts. The research firm notes how March has usually been a volatile time of year for bitcoin, which is no different this time.
Starting 2021 with its best performance since 2013, Bitcoin’s price nearly doubled in value over the first seven weeks of the calendar year. Even after the sell-off at the end of February, the crypto asset recorded its 5th consecutive month of gains.
But the price tends to struggle between mid-February and late March, just as we see a 21% correction over the last week of February, much like all the other times.
“BTC volatility tends to pick up in March, albeit from above-average levels when compared to traditional assets,” noted Delphi Digital.
Bitcoin isn’t alone in this either, we have been seeing Ether struggling, falling under $1,300 during the sell-off, and it was on Monday that it finally went above $1,800 since that day.
However, 30% to 40% drawdowns in the crypto markets are commonplace and “do not change the current long term bull trends.”
“We have no reason to believe that the peak for BTC is behind us this cycle. Bitcoin is still outperforming every major asset class by 40-50 points YTD.”
Despite the heightened volatility, the end-of-year breakout was a strong confirmation of its uptrend. Not to mention, these past few months, Bitcoin has been “transitioning from taboo to accepted amongst institutions. This gives BTC a stronger floor in case of another violent selloff.”
Goldman Sachs Group Inc. revealed recently that it sees substantial demand for digital assets from institutions. In its survey of nearly 300 clients, 40% currently have exposure to crypto.
Besides the investment giants, insurance companies are also pouring in with more and more corporates wanting to add Bitcoin to their balance sheet. As we have been reporting, the Bitcoin fund AUM also continues to surge month over month.
And with the traditional safe haven struggling, gold and precious metal are down over 10% YTD, combined with Bitcoin getting more attention, Delphi Digital says, “we are seeing a greater divergence in fund flows between Bitcoin investment products and the world’s largest gold ETFs.”
As such, any extreme March volatility is transitory compared to the $1 trillion cryptocurrency’s longer-term uptrends, observes the firm.