Market Wrap: Bitcoin faces big odds in bidding for sixth consecutive monthly gain

Bitcoin rose 7%, reversing the losses of the past few days, as some blockchain data has become optimistic and new signs of increased acceptance of cryptocurrencies have emerged by Wall Street companies, including Goldman Sachs, Citigroup and Fidelity Investments.

Bitcoin prices rose 36% in February, marking the fifth consecutive monthly rise in cryptocurrency prices, the first time this has happened since mid-2019. A six-month period of gains has not been seen since the period from November 2012 to April 2013.

Therefore, the odds may seem stacked against a monthly gain in March, which would correspond to the seven-year straight. But the first day of March pushed bitcoin in that direction amid signs that more large institutions are moving into cryptocurrencies. A senior executive at U.S. money-management giant Fidelity Investments compared bitcoin to gold, and investment bank Goldman Sachs said he will relaunch his crypto trading desk after a three-year hiatus. Citigroup, one of the largest banks in the United States, wrote that bitcoin was at a “tipping point” as more institutions adopted the cryptocurrency. Google Finance added a cryptocurrency data guide. And Michael Saylor’s MicroStrategy, which has been a major bitcoin buyer for its corporate treasure, added another $ 15 million.

Read More: Fidelity’s head of global macro says bitcoin may take place in some portfolios

The sudden upward movement after last week’s 21% drop – the biggest correction in the market since March 2020 – was predicted by some traders and analysts who were seeing increasingly high signs of blockchain data.

One of these indicators, the profit rate of spent production (SOPR), represents the profit rate of currencies moved on the blockchain. If the metric is above 1, it means that most holders could sell their bitcoin at a profit. But when it drops below 1, more traders would be selling at a loss, seen as unsustainable, since many holders are reluctant to accept anything but profits.

And the metric dropped below 1 on Saturday for the first time since last September, according to data from Glassnode. The implication is that investors would refuse to sell until prices go up.

Read more: Why $ 1 million Bitcoin is coming

“The SOPR metric has been trusted for opportunities to ‘buy the dip’ in bull markets,” Norwegian blockchain company Arcane Research wrote in a tweet on Monday.

“In a bull market, investors are more inclined to make profits to the point of stop-profit and refuse any stop-loss order,” wrote the BeatleNews cryptography account on the Chinese-language social media platform Weibo, wrote in a post on Sunday night, “When the SOPR is below 1, the currencies available for sale will decrease and it will be easier for prices to recover. “

On the price chart, as bitcoin fell close to $ 43,000 on Sunday, it was just above a key support price range of $ 40,000- $ 42,000, as mapped by Singapore-based crypto firm QCP Capital on its channel. Telegram on February 22. above.)

The price range represents “the hedge fund’s trading level corresponding to the parabolic trend line”, wrote QCP Capital. “This has to be maintained to preserve the strong bullish momentum and now it is the bull and bear line in the sand.”

Bitcoin futures markets continued to cool over the past weekend, a sign that traders were reducing risk and deleveraging, and possibly restarting for a new bullish run. The rate of perpetual financing of futures – the average cost of holding long positions on major exchanges – fell to 0.006% for an eight-hour period on Saturday, from 0.125% on Wednesday, according to Glassnode.

The rate of perpetual financing for futures over the past three months, as shown in the Glassnode chart, rose during each price increase and followed with a correction after reaching a new peak.

The recovery of U.S. stocks on Monday may also signal a renewed appetite among investors for risky assets, which would include bitcoin. The liquidation of the cryptocurrency last week came with an increase in yields on U.S. Treasury bills, raising concerns that the Federal Reserve may soon tighten monetary policy. Bitcoin benefited last year from an exceptionally loose monetary policy.

The yield on 10-year Treasury notes, the benchmark borrowing cost in global debt markets, dropped to 1.43% on Monday, which calmed some investors’ nerves about potential restrictive monetary policies.

Read more: Investing in cryptocurrencies is unwise, says New York attorney general

As the cryptographic data company Skew wrote in a tweet Last Friday, the correlation between stocks and bitcoin increased last week because both markets lost altitude with the increase in bond yields.

“Let’s see how it evolves,” Bendik Norheim Schei, head of research at Arcane Research, told CoinDesk. “A break above $ 52,000 would be encouraging, but I wouldn’t be surprised if we get more variation. It was a good start to the week in traditional markets, and if last week’s uncertainty ends, I hope bitcoin will also continue to rise. “

Ether (ETH), the second largest cryptocurrency by market capitalization, rose on Monday, trading around $ 1,520.44 and rising 7.26% in 24 hours from 21:00 UTC (4:00 pm ET).

The ether continued to move together with bitcoin, but a key market indicator showed some potential risks from the ether price movement going forward.

According to Skew, the Grayscale Ethereum Trust (ETHE) premium fell negative last week, meaning the trust was being traded at a discount to the cash price, the first time ETHE closed in negative territory. .

“Our concern is with the many players using Grayscale Bitcoin Trust and ETHE as part of their cash-and-carry strategy and whether a sustained discount will have serious side effects across the curve,” wrote QCP Capital on its Telegram channel on Sunday . “This is our risk when entering March.”

The gray scale is owned by Digital Currency Group, the parent company of CoinDesk.

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The digital assets in CoinDesk 20 are mostly on green Monday. Notable winners from 21:00 UTC (16:00 ET):