Crypto will end flat in February as the 2023 rally stops
Cryptocurrencies closed February largely unchanged as an enthusiastic rally to start 2023 stalled in the second month of the year.
In February, ether (ETH-USD), the market’s second-largest cryptocurrency, outperformed its larger peer bitcoin (BTC-USD), rising 1.6% against bitcoin’s more modest gain of 0.4% for the month. In January, bitcoin surged nearly 40% to record its best start to a year since 2013.
Christopher Newhouse, a crypto options trader with GSR, said the February action in bitcoin was “definitely duller for directional trading than January.”
As Newhouse explained, trading volume for crypto derivatives remained high in February, but volatility eased over the course of the month. Bitcoin remains the most popular cryptocurrency for traders, but in recent weeks those bets “toward the end of the month have been mixed or slightly bearish.”
In the same period, the major US indices were lower, with the benchmark S&P 500 (^GSPC) falling 2.5% during the month.
“Only short-term interest in Bitcoin was tepid,” Michael Safai, co-founder and partner of crypto trading firm, Dexterity Capital told Yahoo Finance. Safai pointed to US regulatory interventions in recent weeks as another reason why investors may take a more cautious approach to cryptocurrencies.
In an annual report filed Monday afternoon, Robinhood ( HOOD ) shared the latest regulatory probe, alerting investors that the SEC subpoenaed the company in December to inquire about how it lists and holds cryptocurrencies.
“There is still optimism that things will start to figure out in the coming months,” Safai added, pointing to longer-dated bitcoin call options placed this month with a strike price of $30,000.
Since the beginning of 2023, bitcoin watchers have focused closely on whether bitcoin’s price can break $25,000. Between 19-20 February, the level was briefly reached. Bitcoin has since fallen more than 6% and is currently changing hands near $23,200.
“Bitcoin is comfortably in a trading range, and that may be the case for some time to come,” said Edward Moya, senior analyst at Oanda.
Based on historical data compiled by Yahoo Finance, bitcoin in March has shown a positive return in only three of the past nine years. On average, the coin has shown a loss of about 5.3%
Meanwhile, interest in ether over bitcoin (ETH-BTC), which serves as an indicator of general risk-taking within the crypto market, has steadily picked up in recent weeks.
Ethereum is also drawing more attention as it approaches its next protocol upgrade scheduled for early April.
“Overall, Ethereum has underperformed over the past six weeks,” strategists at Fundstrat said in a note on Monday. “This seems to be changing.”
Click here for the latest crypto news, updates, values, prices and more related to Bitcoin, Ethereum, Dogecoin, DeFi and NFTs
Read the latest finance and business news from Yahoo Finance
Download the Yahoo Finance app for apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flip board, LinkedInand YouTube
