Strong Q1 close and the 7th consecutive positive month for Bitcoin & a volatile week in crypto

What Happened This Week

March was the 7th consecutive month with a positive performance for Bitcoin

The last weekend in March was a rather quiet one for Bitcoin and the broader crypto market, with Bitcoin trading flat around the $70’000 mark. On Sunday evening, Bitcoin closed the month of March with a gain of over 16% resulting in the 7th consecutive positive month, which is a record. The monthly close at around $71’000 was also the highest one in the history of Bitcoin so far. The weekend was not spectacular for most altcoins either, with WIF, the new meme coin, being the exception. It increased over 25% over the weekend and traded just below $5 resulting in a new all-time high. Looking back at the week before, digital asset investment products saw a recovery in sentiment, with total inflows of $862 million. These inflows almost made up the weekly outflows from two weeks ago, when digital asset investment products saw an outflow of roughly $900 million.

When looking at Bitcoin’s historical monthly returns, the significance of this seven-month green streak stands out. It's also quite interesting to see the seasonality in Bitcoin’s performance; with April historically being a positive month for Bitcoin, February, October, and July also stand out as historically green months.

Bloody start to the week

Meme coins like WIF outperforming over the weekend was once again a sign of euphoria in the markets, and it once again ended up being close to the temporary price top in the broader market. Bitcoin reached its weekly high early Monday morning at $71’500 and then corrected down roughly 10% bottoming on Wednesday just above $64’000. This correction to the downside was once again a market-wide phenomenon, with the total market cap decreasing from $2.62 trillion to $2.34 trillion in a matter of two days. Monday was not only a red day for the crypto market; the BTC spot ETFs also had a total net outflow of $85 million, with a $302 million outflow from GBTC while IBIT had a net inflow of $165 million. On Tuesday and Wednesday, the spot ETFs showed net inflows again, with $39 million of inflows on Tuesday and $113 million on Wednesday. Interestingly, GBTC experienced its lowest outflows on these two days.

DOJ moves 30’000 BTC connected to the Silk Road seizure

More than 30‘000 Bitcoin linked to the Silk Road hack and under the control of the U.S. government appeared to be on the move Tuesday. The DOJ ended up sending 1’999 BTC to a wallet that is tagged as a Coinbase Prime wallet. After these recent transactions, the primary government wallet still contains 29’799 BTC. The U.S. government initially came into possession of over 50’000 BTC connected to Silk Road in late 2021 following the apprehension of a hacker associated with Silk Road. The U.S. government began selling off this stash last year, with one of the most significant sales occurring in July 2023, involving 9’000 BTC.

Funding rates, crypto fear & greed index, and open interest

Funding rates of the major cryptocurrencies have decreased significantly this week, reaching levels last seen around March 20th and March 23rd when Bitcoin reached its last temporary bottom at $60’000 before increasing to above $71’000 again during the last week. Meme coin funding rates were once again a reliable indicator for an overheated market, as you can see in the chart below. The crypto fear & greed index came down from extreme greed levels of 90 during the last month to greed levels of 70 yesterday but shot back up with the increase in price and is currently at 79 back in extreme greed. The exchange-traded open interest (USD) has also decreased back down to levels last seen during the correction down to $62’000 resulting in the temporary bottom on March 22nd.

Wormhole Wednesday

In recent weeks and months various new projects have been launched or announced in the crypto world. Founders seem to be keen to release their projects during these volatile times with positive market sentiment. On Wednesday, the much anticipated Wormhole Protocol was officially launched. Wormhole is an open source blockchain development platform connecting the decentralized web. The protocol facilitates cross-chain communications across more than 30 blockchains and layer-2 platforms. Many other projects have not launched yet and are planning to release their main net in the coming months, such as Monad, which is set to release its main net at the end of the year. Our Head of Research Dominic Weibel talks with leading crypto founders, CEOs and pioneers building the next generation of crypto projects. You can check it out here.

This week in the traditional markets

U.S. equities such as the S&P 500, Nasdaq and Dow Jones Index did see a rather sharp drop at the market open on Tuesday and then recovered some of the loss and traded sideways for the rest of the week up until yesterday evening when the S&P 500 dropped more than 2% in a matter of hours. Gold has reached a new all-time high this week, trading above $2’300 for the first time in history, and is up over 10% year-to-date. Light Crude Oil Futures have also reached a new yearly high this week, trading at levels last seen in October 2023. The U.S. Dollar Index seems to have reached a temporary high at the beginning of the week after trading to the upside for most of the month of March and has now declined roughly 1% since Monday. When looking at the market sentiment, the fear & greed index for stocks spent quite some time in extreme greed and greed territory but has now dropped into neutral levels after yesterday’s sharp drop just before market close.

The Bitcoin Halving is around the corner

While Bitcoin Cash has completed its second halving in the early morning of Thursday, the Bitcoin halving is expected to take place on Saturday, April 20th. We have published several articles around the halving over the last few months and have a dedicated landing page with a countdown to the fourth halving. Learn everything you need to know about the Bitcoin halving and read the articles here.

Volatile Thursday

While the crypto and stock markets did not see much action on Wednesday, Bitcoin picked back up the pace on Thursday morning rising almost 6% and reaching a daily high of $69’300 on Thursday before correcting down to $66’400 overnight. Bitcoin is trading at $67’000 at the time of writing. Like mentioned above, the U.S. equities experienced a sharp decline yesterday evening just before the market close. It remains to be seen what the reason for this drop was, there are rumors that the escalation between Israel and Iran or U.S. secretary of state Blinken’s remark on Ukraine joining the NATO could have played a role in it. Others were speculating that today’s U.S. Nonfarm Payrolls numbers were leaked beforehand. Yesterday’s decline in the S&P 500 marks the biggest daily correction in the last months, as seen in the chart below.

Our Take

Currently, Bitcoin is in a phase characterized by a search for stability, having experienced rejection once again as it approached above the $70’000 threshold following its recent near-reaching of an all-time high. It's worth noting that the broader risk-taking seems resilient, as indicated by moderated funding rates and a gradual but steady rise in open interest across major currencies. However, it's imperative to acknowledge the impact of selling pressure originating from the spot markets, exemplified by the net outflow of funds from GBTC and the US Government's sale of Bitcoin. These actions, not met with equivalent buying activity, have prompted corrections in both Bitcoin's price and the wider altcoin markets. Furthermore, the increasing correlation with traditional financial (TradFi) markets merits attention, as recent data demonstrates that sudden corrections in TradFi markets can influence cryptocurrency prices across the board. As the BTC halving event approaches, the possibility of heightened volatility becomes more apparent. Yet, when analyzing the extended time frames, it's apparent that both Bitcoin and the altcoin sector remain optimistic, lacking any clear fundamental indicators indicating an imminent shift in the current market trend.

The Week Ahead

Wednesday, April 10, 2024

• U.S. – CPI Numbers
• U.S. – FOMC Meeting Minutes

Thursday, April 11, 2024

• EUR – ECB Interest Rate Decision

Friday, April 12, 2024

• EUR – German CPI Numbers