Bitcoin Teeters on Support Levels as Volatility Strikes

Bitcoin and the crypto market in general have been tagged as a way to get uncorrelated market performance compared to equities, but that hasn’t been the case thus far. Along with inflation, geopolitical tensions arising from the Russia-Ukraine conflict are also putting downward price pressure on bitcoin.

“Recent volatility has been driven by factors such as inflation, the Ukraine crisis [caused by Russia’s invasion] as well as contractionary monetary policies,” said Daniel Khoo, research analyst at Nansen. “This has affected not only the stock market but also the crypto market, which seems to follow in tandem recently.”

Bitcoin’s price has fallen about 14% so far this year after reaching an all-time high of $69,000 back in November 2021. It’s following the broad stock market downward, as evidenced in the S&P 500’s 10% loss for the year.

Nonetheless, some analysts are still eyeing bullishness for the leading cryptocurrency. The U.S. Federal Reserve is expected to keep pushing rates higher to keep pace with inflation, but that’s also sparking recession fears.

One analyst, however, is bullish with a dose of caution. While prices are heading lower, data on bitcoin’s supply could be telling a different story.

“Even though we have a more hawkish Federal Reserve which could lead to more pain for global markets in the short term,” said Marcus Sotiriou, analyst at the U.K.-based digital asset broker GlobalBlock. “I am still cautiously bullish.”

“Bitcoin’s on-chain metrics are contrastingly bullish,” wrote Sotiriou. “Data from Glassnode shows that the percentage of bitcoin’s supply that has not moved in one year is at an all-time high. I think this data tells us that whilst these macro headwinds are ongoing, bitcoin is being distributed from those who see it as a risk-on asset, to long-term holders who have strong conviction in bitcoin’s long-term potential.”

Investors looking to play bullish bitcoin prices through a traditional stock market exchange can look to exchange traded funds (ETFs) like the ProShares Bitcoin ETF (BITO). As opposed to investing directly in the cryptocurrency itself, BITO focuses on bitcoin futures, giving investors exposure to bitcoin without dealing with the day-to-day, hour-by-hour, and even minute-by-minute volatility associated with the crypto markets.

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