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In-depth analysis: With the end of March, the price of Bitcoin will rise again!
[2021/4/1]
Unlike October, March has been a dull month for risk assets for many years. Some experts attribute this weakness to investors making profits from their investments to pay taxes. Although whether investors need to sell their investments to pay taxes is controversial, history shows that compared with other months, the market in March did indeed underperform the broader market.
For Bitcoin, this phenomenon is even more obvious, and it determines the direction of all other encrypted assets. According to statistics, March has been a bad month for cryptocurrencies. The benchmark cryptocurrency BTC has dropped 8 times from the 10 times that it had in March in the past 10 years. Although March of this year was not a completely negative month, the price of BTC has been weak, and the decline was significantly greater than the increase. Although no one can pinpoint exactly why March is particularly bad for BTC, miners who are the largest source of BTC supply may contribute.
Since miners are corporate entities, they need to pay taxes. Therefore, many mining entities may need to sell BTC to legal units to pay taxes due in April in most countries. Then, this phenomenon has a self-fulfilling effect, because known traders start to sell or short BTC from the end of February to mid-March every year to get ahead of these miners and get the highest price.

                            

March is also the end of the quarter, and investment funds need to rebalance their investment holdings. Starting from the notable January and February of this year, many funds with huge profits may have closed their profits. As evidenced by the decline in Coinbase and Grayscale Premium in March, both premiums have changed from positive to negative.
In addition, March is also one of the quarterly expirations of futures and options contracts. In particular, the number of derivative contracts that expire on March 26 this year is huge, valued at approximately US$8 billion. Traders generally prefer to avoid the market until such a large contract expires to avoid the potentially high volatility associated with such expiration.
According to historical data, the price of BTC always rebounds after the expiration of a derivative contract, as shown in the figure below, which plots the 7-day average return of BTC before, during and after the expiration.

                           

So far, BTC's price performance is in line with expectations, rebounding after the March contract expires on March 26, and trading is fairly healthy before the end of March.
Therefore, as we move away from the frightening March, institutional and retail BTC investment products will continue to be launched to make it easier for new entrants to enter the market, and investment in BTC is expected to increase. A large number of new investments may cause prices to rise again in the next few months, especially as the outlook for the US BTC ETF is getting higher and higher.
On-chain data still shows that more and more BTC are being transferred from exchanges to cold storage, which will only explain the supply crisis more over time and lead to much higher prices.

                           

In addition, most data still shows that the peak is far from over, which suggests that this may just be the market consolidating before calling for a higher in April.

                           

Historically, April has always been a month of comeback. Compared with March, it has always been a brilliant record, but the other way around. BTC has rebounded in 8 of the past 10 years in April, recording a double-digit return of 6 times. There are also good records in May and June. Therefore, if historical performance is a good indicator, we may see a considerable increase in the price of BTC in the next few months, and the $100,000 BTC this summer may not be so out of reach.


(This article is from Bitpush.News)
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