Bitcoin: Safe Amid Inflation Turbulence?

Bitcoin has surged by 18% in the last three days, driven by news of more money printing amidst the ongoing global meltdown of traditional markets. This rally has sparked speculation among investors, with BTC surging past the resistance level of $26,000  (200-week moving average), though for a short time. Is it a signal of the end of the crypto winter and a new bullish market?

Bitcoin Recent Rally: Over 18% Gains in Three Days

Although BTC has rallied, it is still within the range of $16,000-$25,000, making it too early to say if it is truly bullish. However, the 200-day mean trend has acted as a support level for BTC at $20,000, and the bulls have quickly regained it. The ongoing global meltdown of traditional markets has caused investors to take high conviction in BTC, with experts previously suggesting a break above $24,000 to be significant.

CPI and  Inflation Concerns

The release of the Consumer Price Index (CPI) for February from the US Bureau of Labor Statistics (BLS) showed inflation at 6.0%, in line with expectations. The inflation data from the US is bullish for Bitcoin as it could give the Fed room to pause rates or even cut them. The CPI print is bullish for Bitcoin and crypto, causing BTC to break through the resistance level of $25,200 and hit $26,278.

Recent US Bank Closures: Bitcoin Protection

Recent closures of crypto-friendly banks like Silicon Valley Bank and Signature Bank did not affect crypto prices. However, it remains to be seen if this trend will continue in the future.

Federal Reserve rate hikes impact the financial system, including banks and other sectors. When interest rates increase, it makes borrowing more expensive, which can lead to a slowdown in economic activity. This can cause a decrease in revenue for banks, leading to a downturn in their stock prices. 

Conversely, Bitcoin has emerged as a safe-haven asset during times of uncertainty. As investors worry about the impact of higher rates on the economy, they turn to Bitcoin as a hedge against inflation and currency devaluation. 

With the global economy in turmoil, many governments have turned to money printing to help support their economies. This has caused investors to turn to Bitcoin as a way to protect their wealth.

Also Read: Crypto Predictions 2023: Analysing Market Trends, Bitcoin and Upcoming Winners

Impact on Global Crypto Markets

At the time of writing, the global crypto market cap reached $1.11 trillion with a 2.74% 24-hour gain. Altcoins, including Polkadot($6.34 up 3.84%), Dogecoin($0.07503 up 2.63%), Solana($21.03, up 2.16%), Ripple($0.3789, up 1.34%), and Litecoin($84.46 up 3.28%), are also in the green. However, Bitcoin continues to lead in gains compared to other large-cap cryptocurrencies. Altcoin season could potentially occur, where altcoins catch up to Bitcoin’s gains.

Futures Data and Options Trading

Bitcoin may face volatility due to a mix of futures data, open interest, funding rates, and options trading. Bitcoin futures data is showing an ideal mixture for strong volatility. Therefore, with open interest up 23% and funding rates slightly negative. The trade volume of Bitcoin Options reached the second all-time peak notional value of about $2.5 billion. 

Wrapping Up

Bitcoin’s recent rally is a combination of factors. This includes inflation concerns, ongoing global market meltdowns, and futures data and options trading. While its future rally remains uncertain, its recent surge has made it more valuable than Visa and Mastercard. Investors continue to speculate if BTC will break above $26,000 to signal the end of the crypto winter and enter a bullish market. At press time, BTC was recorded at $24,901, up by almost 13% within a week.