Over the last two weeks of March the Bitcoin price traded an $11,000 range between $60,770 and $71,800. Again the lower price levels were short lived but there appeared to be no true conviction to extend the current bull market after mid month price highs. The Katana algo repeatedly established short positions only to be stopped out on no follow through, resulting in only one of the seven short trades closing at a profit. The Katana Program performance for March was -9.23%.
Recent industry reports indicate that Long-Term Holders (LTHs) of Bitcoin have been selling after the all time highs registered mid month, albeit this is taking place on a smaller scale than seen at previous bull market peaks, and this is leading to increased volatility as previously dormant supply enters the market. Over $2.6 billion in profit is calculated to have been captured through on-chain transactions, of which 40 percent is attributed to the Long-Term holders.
Spot Bitcoin ETFs’ buying continues to underpin the market. Positive net inflows into ETFs resumed again last week, as passive demand continues. At the current rate of inflows, BTC demand is around double the value of Bitcoin being mined. The impact of miners on the Bitcoin price appears to be diminishing basis total mining revenue versus BTC spot traded volume.
The Bitcoin halving will take place around April 20th. It is difficult to ascertain at this stage whether the halving impact on flows will be a more significant driver for the BTC price than macro events such as potential monetary policy shifts by the major central banks. The assumption that global inflation has been tamed in recent times will be put to the test in the near term as some indicators are reflecting a certain level of inflation entrenchment that the market may not be anticipating. There is always a risk that we witness the exhaustion of traditional mechanisms to fight inflation. Whilst these factors may impact negatively on the Bitcoin bull case in the short term, it’s hard to imagine a better macro environment for Bitcoin in the medium and long term.
