Bitcoin’s Upward Momentum Is Waning, Making Investors Wary
After an eventful January, Bitcoin price has slowed, making analysts uncertain about the future direction of the flagship cryptocurrency. The Bitcoin price rallied by 52.97% before making a 10% retracement in the middle of February 2023. The price has since moved sideways as users remain uncertain about what the coming months could bring.
The Mid-February retracement in Bitcoin price coincided with escalated regulatory behavior by the United States Securities and Exchange Commission (SEC). The SEC accused Kraken, a top cryptocurrency exchange, of marketing unregistered securities. This accusation caused Kraken to pay a fine of $30 million and terminate its staking-as-a-service program for users.
During the same period, adjusting macroeconomic policies in the U.S. contributed to the stalling of the Bitcoin rally, eventually developing into a recognizable pullback. Bitcoin price dropped from a year high of $25,270 to a local low of $22.770 as February ends. Some macroeconomic adjustments include implementing a higher-for-longer interest rates policy. Such policies tend to dampen investors’ enthusiasm for speculative assets like Bitcoin.
A Bloomberg analysis that compared the recent Bitcoin behavior with historical data indicates the possibility of a further pullback in Bitcoin price in March. The analyst notes that the bulk of the Bitcoin rally in the past two months happened in January. Since the beginning of February, Bitcoin’s gain has withered to about 2%.
Based on history, four out of the last five times that Bitcoin price behaved similarly, the price dropped further in the following month. The only time the pattern did not fulfill was in February 2021, in the heat of a significant bull run.
Noelle Acheson, the author of the “Crypto Is Macro Now” newsletter, corroborated the impact of macroeconomic factors on Bitcoin price. He noted that the dollar strength, amid bets on higher borrowing costs, is playing a role in the ongoing market correction.
Bitcoin trades at $23,409 at the time of writing. Having dropped by 0.82% for the day.