Bitcoin Sellers Are Running Out of Ammo; Sees Green Start of the New Month
Meanwhile, Warren Buffett says Fixed-income investors worldwide, from pension funds, insurance companies to retirees, all are facing a “bleak future.”
Last week has been a brutal one for Bitcoin as the prices continued to go lower and lower. The low, for now, has been set at around $43,100, representing a drop of 26% from the Feb 21 high of about $58,300.
“BTC has not yet seen a capitulation wick but sellers running out of ammo,” commented trader and economist Alex Kruger. “Stocks & bonds opened sharply higher. Playbook is strong week up, not just a strong open.”
Still, another drop lower will take us to the January high of $42,000, which still won't be anything out of the ordinary.
During the 2017 bull cycle, Bitcoin had several drawdowns of an average of 30% to 40%, and such a pullback this time would take us just under $35,000. This means we can see another leg lower especially given that March is not historically a bullish month for Bitcoin rather just the opposite.
$45k is actually very strong support, and “any dip into $39k is a no-brainer BTFD,” said on-chain analyst Willy Woo.
Moreover, the recent sell-off has been ignited by the macro environment. As we reported, the stock market has been dragging Bitcoin down along with it in the aftermath of bond prices soaring.
Equity / Crypto correlation is on the rise this week with all eyes on the bond market pic.twitter.com/rrkAZHeQcV
— skew (@skewdotcom) February 26, 2021
The sudden US treasury lift-off has been on the changing outlook for inflation and economic growth following unprecedented stimulus and monetary easing along with the increasing COVID-19 vaccinations. This further pushed the US dollar up.
Still, with the recent uptrend, the rates have only gone to pre-COVID levels. Even Warren Buffett mentioned it in their annual letter to his followers Saturday where he wrote, “bonds are not the place to be these days.”
The billionaire mentions how the yield on 10-year U.S. Treasury bonds has fallen 94% from Sept. 1981 levels. “Fixed-income investors worldwide – whether pension funds, insurance companies or retirees – face a bleak future,” reads the letter.
Commenting on this, Bitcoin bull MicroStrategy CEO Michael Saylor said if we agree with this that “bonds are broken as a store of value, then corporate treasury reserve strategies employing bonds no longer work to preserve shareholder value,” and of course, the answer according to him is the leading cryptocurrency.
A low yield has been actually positive for Bitcoin and risky assets; as such, rising yields impact the prices in the market.
On the first day of March, Bitcoin went just over $48k, making a green start of a new month, following positive sentiment in the risky asset driven by three variables: bond panic over, Powell to calm markets, and fiscal package approved, noted Kruger