Bitcoin prices rise until early March. How the month could end.
Bitcoin
and other cryptocurrencies rose on Wednesday, starting March on the right foot after a roaring rally to start 2023 stagnated somewhat in February. History says that the weeks ahead could be even more difficult.
The price of Bitcoin has risen 1.5% in the past 24 hours to $23,750. The largest digital asset is still up around 40% so far this year, but has largely failed to consolidate above the $24,000 level, let alone something over $25,000 – the top of a recent rally that also marks the highest point since last summer. Bitcoin rose from around $16,500 in late December to over $23,000 in late January, but has failed to make the same amount of progress in the month since.
“March is considered an unpromising month of the year for the top cryptocurrency, having fallen in eight of the last 12 years with an average decline of around 15%,” said Alex Kuptsikevich, an analyst at broker FxPro. Kuptsikevich said that when Bitcoin has rallied in March, it has climbed an average of 16%.
While Bitcoin’s surge to start the year marked a massive outperformance by
Dow Jones Industrial Average
and
S&P 500
— with the correlation between crypto and the stock market fading — investors should continue to look to stocks as a guide. While factors specific to crypto, such as regulatory scrutiny and institutional adoption, are important, the macro picture and sentiment for riskier assets remain influential.
Investors are worried about the state of inflation in the US, which pushed the Federal Reserve to raise interest rates quickly last year. Higher rates dampen demand for riskier bets like stocks and cryptos, and recent signs that inflation may be persistent have raised the prospect that rates will stay higher for longer.
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Still, after such a strong start to 2023, crypto traders are still betting on more gains. Analysts at crypto exchange Bitfinex said in a Monday note that moves in the market indicate that “sentiment across options desks is bullish again after a week of remaining neutral.”
The technical outlook also looks strong outside the crypto derivatives market.
“The strong growth in January and the renewal of local highs in February suggest that the bulls are winning,” said FxPro’s Kuptsikevich. “At the same time, the technical picture on the weekly time frame suggests that only a consolidation above $25,000 will strengthen the bullish view of the market.”
Beyond Bitcoin,
Ether
— the second-largest crypto — advanced 1.5% to $1,650. Smaller cryptos, or altcoins, were more mixed with
Cardano
just below flat but
Polygon
2% higher. Memecoins were also muted, with
Dogecoin
barely above flat and
Shiba Inu
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– which has been shown to risk a correction – down 0.5%.
Write to Jack Denton at [email protected]
