Although Bitcoin has rallied at multiple stages, it’s fair to say that 2022 has belonged to the bears thus far. As per Messari, Bitcoin’s year-to-date ROI sat at a negative 18%. Altcoins have also been hit particularly hard as a result, with the top coins falling between the range of 13%-53%.
Weak global equity markets, threats of rising inflation, and now a war-torn crisis between Ukraine and Russia have not been ideal for Bitcoin’s growth. The resulting high market volatility has continued to feature in March and it remains to be seen where the price lands up heading forward. At the time of writing, BTC traded at $39,313, down by 7% over the last 4 hours.
Price Chart
Bitcoin started on a new month on a bright note, challenging the $45K price ceiling on the back of a 20% jump between 28 February-1 March. Over the next week and a half, Bitcoin slipped to $37K, rebounded, peaked at $43K, and was moving south once again. Large candles on the daily chart were indictive of high market volatility.
What Causing The Recent Downturn?
It seems like the market had factored in US President Joe Biden’s executive order and investors were locking in their profits following an 8% hike yesterday.
Isolating the external developments, Bitcoin’s price has formed three distinctive higher lows since late January. Higher lows are an indication of sell pressure reducing in the market, allowing bulls to create support at higher areas on the chart. When combined with a horizontal upper trendline, an ascending triangle took shape on the daily chart. Ascending triangles are generally considered a bullish pattern that sees a breakout to the upside.
Call Options – Bullish?
Although Bitcoin’s near-term is a difficult bet, especially with the rising volatility, traders maintained a bullish outlook for next month. Data from Deribit showed that more than 5K call options expiring on April 29 were traded over the past 24 hours with a notional value of $210 Million. The majority of the bets were priced at $60,000, followed by $42,000 and $50,000. Notably, around 1,600 call options expiring on 29 May were priced in at $80,000. Generally, an increase in the number of investors buying call options is a bullish sign as the buyer only profits once the price rises.
Conclusion
Bitcoin’s correction should not alarm investors until the chain of higher lows is broken. For the moment, Bitcoin was holding strong above $37K even after factoring in the recent downturn. During the next upcycle, investors should keep a close eye on whether BTC can break above the $45K price ceiling. A successful breakout would set its price on course to the $52K mark.