More institutional adoption of bitcoin and aid to the economy, boosted BTC in March.
The average return for the second quarter has been 256% since 2011.
After two quarters of good performance, the outlook for bitcoin in April and in the second quarter of the year are encouraging, says Kraken Intelligence, in its report on the cryptocurrency market for the month of March.
Kraken highlights in the study that, despite the low historical performance of the month of March, with only three periods with positive returns since 2013, the price of bitcoin closed that month with an appreciation of 30%. This boom is the second best return since 2013, as reported by this media on April 1.
Among the factors that drove the appreciation of BTC and the cryptocurrency market in March, Kraken mentions increased institutional adoption, the approval of the aid law to the US economy, for USD 1.9 trillion, and several requests for issuance of Bitcoin ETF.
In the bitcoin price curve in the last year, using monthly candles, the upward momentum in the last two quarters can be appreciated. From October 1, 2020 to March 31 of this year, the appreciation of BTC has almost increased six-fold. Bitcoin went from $ 10,500 to $ 60,123 in six months, representing a 471% appreciation in six months.
Regarding the expected performance in April and in the second quarter, the historical data of the price of bitcoin has been favorable on average, the authors note. April is the second highest performing month for bitcoin and since 2013, the average appreciation of the second quarter has been 256%, destaca Kraken.
The area of non-fungible tokens (NFT) was the one with the greatest development during the month of March, with a notable appreciation of 285% and a risk-adjusted return, or Sharpe ratio, of 32.9, as stated in the report. While most cryptocurrencies and sectors within them grew in March, the average return fell 17% and volatility also fell 38%.
In the field of decentralized finance (DeFi), the performance was quite moderate compared to NFTs. However, Kraken highlights all-time high of $ 46.6 billion in total locked value (TVL), achieved on March 13.
March announcements in favor of bitcoin
In continuation of the wave of institutional investment in bitcoin that intensified in 2020, the end of the first quarter was prolific in announcements and declarations of various modalities of approach to the first cryptocurrency, by institutional investors highlighted in the report.
There were three announcements from MicroStrategy regarding additional BTC acquisitions: one for $ 15 million on March 1, another for $ 10 million on March 10, and finally a third, on March 12, for $ 15 million. In total, the company led by Michael Saylor is approaching 100,000 BTC accumulated, as part of its strategic treasury reserve.
On March 6, the US Senate approved the economic aid law, for a total of USD 1.9 trillion. Three days later, JPMorgan issued debt notes based on a basket of stocks of companies that have invested in bitcoin. Morgan Stanley becomes the first investment bank to offer its clients access to funds that include bitcoin.
At the regional level, Brazil became the first Latin American country to approve the issuance of a bitcoin ETF, while Purpose Investments announced that its bitcoin ETF launched in Canada can be traded on the Santiago de Chile stock exchange, in dollars Americans.
Bitcoin bull market support
Kraken proposes the thesis that the support of the current phase of the bitcoin cycle consists of two weekly moving averages: the 21-week simple moving average (21W SMA) and the 20-week exponential moving average (20W EMA).
In previous bull markets, the price of bitcoin has been above such moving averages, with occasional price curve intersections with them, before rising in further bullish momentum, Kraken notes.
There is no precision on when a correction will occur and the price crosses the curve of the moving averages in its descent, says Kraken, since the trend of these is increasing.
Since January, the 20W EMA and 21W SMA curves have been growing by USD 1,822 and USD 1,681 per week, respectively, the authors say. “It can be expected that, by the first of next May, these support levels will be at USD 48,702 and USD 44,165”.
If this trend continues, eventual corrections of the BTC price curve will be limited in percentage, from -17% to -25% by the end of May, says the study. At the time of this writing, bitcoin is trading at $ 59,316, in figures from CoinMarketCap.