As a dismal first quarter draws to a close, cryptocurrencies seem to have the wind in their sails. It has broken the $2 trillion mark and is proving surprisingly resilient in the midst of global chaos.
At Monday’s high of $47,765, market leader bitcoin it broke out of the narrow $34,000-$44,000 range it traded in for most of 2022. Through a steady move higher from a low just above $40,000 on March 21, it has gained 18%.
Its comparative stability, at least compared to past performance, stands in stark contrast to stock markets, traditional currencies and even safe-haven gold, which have been rocked by the Russian invasion of Ukraine and the Federal Reserve tightening.
Bitcoin jitters have subsided lately.
Its 30-day volatility is around 4%, about two-thirds of the level it was in June 2021, according to futures trading platform Coinglass. The highest this year was 4.56% on March 16.
This measures your deviation from your own standard levels, and bitcoin it has still had wild swings, like a 17% jump on March 1. But it is clearly more moderate than in 2021, when it could move up to 40% in one day.
By comparison, the tech-heavy Nasdaq is up 5-6% on multiple days in 2022, and down 20% in the year to March 14, before bouncing back to cut half that loss.
“The biggest conflict we’ve seen in Europe since World War II has really shaken global markets,” said Pierce Crosby, general manager of charting platform TradingView in New York.
“What we have seen in other major assets is a huge knock-on, both from the US equity markets and global markets,” he added. “Bitcoin it’s been more or less in a pretty tight range…but actually, in terms of relative strength, it’s very bullish.”
2 BILLION DOLLAR CRYPTOCURRENCIES
The total value of the cryptocurrency the market topped $2 trillion on Friday, according to analytics platform CoinMarketCap. To put that in context, the market briefly hit $3 trillion on November 10, when Bitcoin hit $69,000.
The meandering rise above $2 trillion has been slow and has also been aided by a multiplication of coins and tokens: the number CoinMarketCap counts has risen by almost 5,000 since November to stand at 18,511 cryptocurrencies.
Bitcoin’s market capitalization has reached $902 billion, but it still has a ways to go to regain the $1 trillion it commanded in November. While still the dominant crypto, its market share has also gradually fallen from 70% of the total capitalization in early 2021 to 42% now.
WHAT AWAITS US?
Many cryptocurrency investors have thought that they could guess the address of bitcoin before the fickle cryptocurrency left them lying in the financial dust.
“Although bitcoin remains strong in the short term, rising oil prices increase the likelihood of a recession over the next year,” said Marcus Sotiriou, an analyst at UK-based digital asset broker GlobalBlock.
“Oil has risen about 25% in the last six days alone, and bitcoin bulls will want to see this decline to maintain their strength.”
That said, a few other technical factors point to bullishness for bitcoin.
Funding rates, which measure the cost of holding bitcoin through futures, have turned marginally positive after being negative for most of this year, signaling that investors are willing to pay to go long. It stands at 0.003% on the CryptoQuant analysis platform, although still below the high of 0.06% reached in October.
Coinglass’s long-to-short ratio also increased from 0.95 on March 20 to 1.1, the highest level in at least four weeks.
Blockchain data provider Chainalysis said a growing proportion of bitcoin, almost 60% of the total supply, was held for more than 52 weeks, up from 54.72% in the last 25 weeks.
However, Ashwath Balakrishnan, research vice president at Delphi Digital in Bangalore, cautioned that it was difficult to identify a lasting market direction.
“Everyone is a little bit cautious,” he said. “If (bitcoin) rejects $46k and goes back down, then it probably means we are stuck in range-bound conditions for at least another month or so.”