Bitcoin Faces Toughest Q1 Since 2018 Amid Trade Turmoil and Volatility
Bitcoin experiences a 13% loss as it nears the end of Q1 2023, marking its worst start since 2018. Impending U.S. trade tariffs and economic data are causing volatility, with analysts noting potential bearish patterns. Despite challenges, some suggest Bitcoin has held up well under macro pressures. Traders are advised to remain cautious and observant in the volatile market conditions ahead.
As Bitcoin (BTC) approaches the end of the first quarter of 2023, it is marked by a notable decline of 13%, indicating a tumultuous start for the cryptocurrency since 2018. The looming uncertainties surrounding new U.S. trade tariffs may further complicate the situation, raising concerns that BTC could drop below $80,000, affecting overall risk sentiment among traders. Despite this downward trend, March has seen Bitcoin experience a less drastic performance compared to initial forecasts, yet the first quarter remains poised to be the worst in seven years.
Bitcoin traders are bracing for potential volatility due to impending U.S. trade tariffs coinciding with the monthly and quarterly candle closes. Recent price movements have brought Bitcoin to its lowest level in approximately two weeks, hovering around $81,200. Analysts have noted a “bearish engulfing” candle formation on the weekly chart, which suggests continued bearish potential unless there is improvement in the overall risk assets landscape. Many market participants are apprehensive as they anticipate the consequences of these developments on Bitcoin’s trajectory.
On April 2, critical U.S. employment data will be released amidst the initiation of new trade tariffs, which the market perceives as a significant escalation in the ongoing trade tensions. These tariffs could affect around $1.5 trillion in imports, prompting heightened reactions from market observers. Federal Reserve Chair Jerome Powell’s forthcoming remarks on interest rates will be pivotal as traders navigate through this uncertain period, particularly in light of Powell’s earlier hesitations to reduce rates amidst inflation concerns.
Current analyses indicate that Bitcoin’s quarterly performance is considerably lackluster, with data reflecting a 12.7% decline, marking the worst first quarter since 2018. While traditional safe-haven assets, such as gold, have outperformed Bitcoin, there is indication that this drawdown is typical within previous bull market cycles, which have seen substantial corrections. Notably, some traders posit that Bitcoin has navigated recent macroeconomic challenges relatively well, with some even arguing that March’s performance was not particularly dismal.
The market value to realized value (MVRV) ratio is currently signaling potential caution as it trends towards its historical average, which represents a shift away from overheated market conditions. Following the recent decline below $80,000, historical patterns suggest Bitcoin could follow a similar trajectory as past cycles where price declines occurred after reaching local peaks. This indicates the necessity for traders to exercise caution in light of potential further downside risks despite previous analysis suggesting the possibility of new all-time highs in the long term.
Finally, the Coinbase Premium remains relatively neutral amidst a backdrop of panic selling, leading to a cautious optimism among traders. The Premium indicates the gap in spot prices between different trading platforms and serves as a barometer for investor sentiment. Should this Premium persist, it might bode well for a potential trend reversal, promoting confidence among U.S. investors seeking additional exposure to Bitcoin despite current market fluctuations.
This editorial piece does not constitute investment advice, and all trading and investment decisions should be made based on diligent research and individual risk assessments.
In summary, Bitcoin is concluding the first quarter of 2023 with significant losses and heightened volatility due to impending U.S. trade tariffs. Traders are on edge with the potential for further price declines as key economic data approaches. Though the overall performance remains disheartening, some analyses suggest that Bitcoin has managed to weather macroeconomic factors better than expected. Moving forward, traders should remain vigilant regarding market signals, such as the MVRV ratio and Coinbase Premium, as they navigate this uncertain landscape.
Original Source: cointelegraph.com
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