(April 1): Bitcoin was holding onto slim gains on Wednesday after snapping a five-month losing streak in March, buoyed along with other risk assets by US President Donald Trump’s intention to end the war on Iran within weeks.
The original cryptocurrency was up as much as 1.5% in early European trading before giving up some of the advance and hovering around US$68,500 at 11.40am in London. Ether, the second-largest token, was holding above US$2,100.
Bitcoin climbed 2.2% in March, its first monthly gain since September, fuelling optimism among some that digital assets may be emerging from the “crypto winter” that began with a price crash in October. Trump’s comment late Tuesday that he expects the US to exit the Iran war in the next two to three weeks triggered a rally across risk assets including equities, even though the crucial Strait of Hormuz remains closed.
Bitcoin, which is only slightly above the roughly US$66,500 level it was at a month ago, would need to sustain prices above the US$70,000 to US$72,000 range to build conviction among investors, said Rachael Lucas, an analyst at BTC Markets.
“Markets have been conditioned by 12 months of policy reversals,” she said. “Bitcoin’s price action tells the story: It stayed compressed in a tight range even as equity markets moved sharply on the headline” from Trump.
See also: Bitcoin tumbles with stocks as Trump signals harder Iran strikes
Ryan Rasmussen, head of research at Bitwise Asset Management, was more optimistic on the outlook.
“Once the geopolitical and macro headwinds clear, we believe the multi-year bullish tailwinds of institutional adoption and regulatory clarity will push Bitcoin to new all-time highs,” he said. “The positive price action in March, after five months of negative prices, is a sign that investors are waking up to this and Bitcoin is on the verge of a breakout from crypto winter.”
ETF inflows
See also: Bitcoin rises with risk assets on Trump Iran War report
Bitcoin has been aided by net inflows of US$1.2 billion into US exchange-traded funds in March, ending a four-month stretch of net outflows.
The token held steady through much of last month even as equities and gold fell on inflation fears fuelled by soaring energy prices. Still, Bitcoin remains about 45% below its all-time high of over US$126,000 reached just before the October selloff.
Investors continue to seek downside protection. Crypto options platform Deribit shows a concentration of over US$1.5 billion worth of put contracts at US$60,000, indicating that some traders are betting the token will again test those levels.
Hayden Hughes, managing partner at Tokenize Capital, said April is likely to see a return to volatility in crypto markets, even as they initially rally on the long-awaited plan to end the Iran war.
“It will feel like the good times have returned,” he said. “Still, our base case is further downside for the remainder of the year caused by supply chain disruption that cannot be fixed quickly, high levels of household debt, stress in the private credit industry and potentially other black swan-esque risks that we feel are not adequately priced in.”
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