With the Bitcoin price surpassing the previous ATH today, surpassing $ 50,000, it can be concluded that the price rally is now officially the longest rally in Bitcoin history.
March is negative for Bitcoin
But as the third month of the year approaches, a few facts need to be clarified. Based on bitcoin monthly returns data, March traditionally tends to be a negative month for BTC price. So why? Probably because it is tax related …
In the chart below, you can see the monthly return rates of BTC by years.
But this time, considering the ongoing seasonal pattern, March 2021 does not seem to be too bad. There is strong corporate support from people like MicroStrategy. The company announced today that they will purchase a private $ 600 million Bitcoin. They announced that they wanted to “use the net income from the sale of the bonds to get additional Bitcoin”.
Why is MicroStrategy’s move important?
So what will this bring? This news is an important development that solidifies how serious MicroStrategy is, as the company has only $ 60.76 million in cash on its quarterly balance sheet as of December 2020.
Until three weeks ago, MicroStrategy had $ 650 million worth of Bitcoin. He then added another $ 10 million, and with the latest move, MicroStrategy plans to purchase an additional $ 690 million worth of Bitcoin after increasing the revenues from the sale of convertible senior securities.
This brings us to the argument that Tesla’s investment of $ 1.5 billion in Bitcoin is just a gesture, especially considering the company has $ 26.7 billion in current assets … However, with banking institutions and payment processing institutions buying Bitcoin, Mastercard, Visa There is great support from key players such as JP Morgan, Blackrock, TSLA, GrayScale and MicroStrategy.
Correlation with gold and stocks decreases
The correlation of the asset with stock and gold is falling rapidly due to the price increase, and this may continue in the current market cycle as the accumulation of whales and institutions increases demand.
At the time of this writing, according to Coinmetrics’ graphs, the correlation with gold was 0019 and with S&P 0.21. This correlation is expected to continue to decline and may even turn negative when the price of bitcoin rises rapidly and exceeds $ 50,000. As institutions continue to line up, reserves in exchanges are also falling, so price discovery is expected beyond the $ 50,000 mark.
An important argument here is the fact that, unlike previous years when exchanges filled with Bitcoin as they sold for tax in March, reserves on exchanges dropped significantly in 2021. 2021 could be the year Bitcoin relaxed past the March nightmare and continues to explore prices beyond $ 50,000.