Bitcoin Drops Lower to $44,000; March Seasonality to Keep the Bears in Control

Historical price performance is expected to keep the bulls in check despite the market having a series of bullish developments.

The price of Bitcoin yet again took a dive today as it gets dragged down by the stock market due to rising yields which is strengthening the US dollar.

The leading digital currency went down to $44,000, down 24.5% from Sunday’s all-time high of $58,300.

As we reported, there is chaos in global markets with the bond yields surging, which heralds growing expectation that both inflation and growth are moving higher. As traders reevaluate their positions, the tech-heavy Nasdaq has been dropping continuously.

“Risk-on assets are taking a hit at the moment — we’re seeing stocks slide, and crypto is following,” said Vijay Ayyar, head of Asia Pacific for cryptocurrency exchange Luno in Singapore. “The dollar is strengthening, which is a good indication to expect a slide in Bitcoin and crypto.”

Gold isn’t safe either, as the price of spot gold falls to $1,755 per ounce.

For now, Bitcoin has made its way to trading just below $47,000, but it is yet to be seen if bulls will be able to prop up the prices. And if Bitcoin continues sliding, it will be brutal for altcoins.

“Without a major catalyst at play, I'm expecting Bitcoin mostly sideways between low 50s and 40 for the next little bit,” said trader TheCryptoDog. “March seasonality also sucks for what it's worth,” he added.

Except for 2019, when BTC was up 6.3% in March, this month has always been a red one for the flagship cryptocurrency.

While Bitcoin’s price continues to look week, crypto data provider Glassnode co-founder says, “Confidence in the continuation of the Bitcoin bull market during this pullback seems to be higher than for the previous dip in Jan,” based on the Bitcoin HODLer net position change, which can be used a great proxy for long term holders' sentiment.

The more negative this indicator goes, the more the holders are taking profits. The same thing can be seen with miners who seem to be holding on to their coins. Moreover, exchange deposits this time have also been less than at the previous peak, which further indicates less profit-taking.

Not to mention the funding rates on perpetual contracts have also normalized.

Bitcoin Holder Net Position Change

Source: Glassnode

Another bullish factor is the liquid supply of Bitcoin, which continues to see a steep decrease.

JPMorgan Chase & CO. is now also recommending investors to “add up to 1% of their allocation to cryptocurrencies” to achieve efficiency gains.

“Cryptocurrencies are investment vehicles and not funding currencies,” strategists including Joyce Chang and Amy Ho wrote in a note Wednesday.

“So when looking to hedge a macro event with a currency, we recommend a hedge through funding currencies like the yen or U.S. dollar instead.”

Additionally, MicroStrategy CEO Michael Saylor is not done buying bItcoin either, as he told Bloomberg that he would consider issuing more debt to finance the company's Bitcoin purchases.

“If you want to preserve shareholder value, you have to hold scarce assets,” he said. “Bitcoin is the most liquid, scarce, uncorrelated asset you can buy.”

As for the bears, Grayscale Bitcoin Trust (GBTC), for the first time, has been venturing deep into the negative territory, with the premium now at -3.77%, as per Bybt. The same is the case for ETHE, which is at -5.27%.

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