Bitcoin’s March volatility looms: Is BTC facing another bull trap?

To this point, Q1 is proving to be one of many bearish cycles in current reminiscence.

Naturally, as we head into the ultimate month of the quarter, merchants are recalibrating their danger/reward outlooks, making an attempt to determine if Bitcoin’s [BTC] present chop is organising a purchase alternative or if it’s simply one other bull entice.

On the macro facet, March is shaping up for one more unstable rally. Inflationary pressures within the U.S. stay sticky, with the most recent Producer Price Index [PPI] report coming in at 2.9%, above expectations of two.6%.

Supply: CoinGlass

So as to add to the uncertainty, geopolitical tensions are weighing on already fragile investor confidence. Analysts are advising warning, recommending merchants keep away from lengthy leveraged positions till the outlook stabilizes.

Regardless of this, CoinGlass data reveals the BTC lengthy/brief ratio leaping from 1.4 to 2.3 in below 72 hours, indicating a pointy surge in lengthy positions relative to shorts as merchants stack bets on Bitcoin shifting greater.

Notably, the volatility doesn’t cease there. The subsequent curveball comes from the upcoming regulatory sit-down on the CLARITY Act, scheduled for the first of March, a transfer that has investors closely watching for any market affect.

Mix that with rising inflation and geopolitical tensions, and March is already shaping as much as be one other FUD-heavy month for Bitcoin. On this context, is BTC’s present chop an actual alternative, or simply one other bull entice?

Macro FUD pushes capital flows, Bitcoin bulls on edge

The market seems to be to be back-testing Bitcoin’s “safe-haven” standing. 

Early signs are emerging of how traders are hedging in opposition to rising FUD, making lengthy bets on BTC really feel extra speculative than strategic, reinforcing the case that the setup may very well be one other bull entice.

On the technical facet, simply three hours into escalating tensions between Iran and the U.S., $650 billion flowed into treasured metals. Gold climbed 1.33%, including $470 billion to its market cap, whereas silver surged 3.82%, including $190 billion, displaying a fast rotation of capital into legacy property.

Supply: TradingView

On this surroundings, Bitcoin’s 3.22% intraday dip isn’t shocking. 

With macro FUD piling up, traders are shifting out of danger property once more, a transfer that is smart given BTC’s correction over the previous few months. The resulting extreme fear solely reinforces this rotational setup.

Briefly, traders are positioning forward of what may very well be one other macro-driven rally, which helps clarify why Bitcoin’s 25% losses so far in Q1 don’t essentially mark the top. As an alternative, with its present setup trying like a textbook bull entice, March ROI may nonetheless end within the purple.

Ultimate Abstract

• Rising inflation, geopolitical tensions, and regulatory uncertainty are pushing traders out of danger property, maintaining Bitcoin bulls on the defensive.
• A surge in lengthy positions makes BTC’s present chop appear to be a textbook bull entice, displaying that its 25% losses to this point in Q1 might not be the top.