Bitcoin and cryptocurrencies may be going through a tough time. According to an analysis of the blockchain, investors fear that the current economic context, and the measures of the American Federal Reserve, will cause a decline in prices during March 2022.
According to the latest Glassnode reporta company specializing in blockchain analysis, most investors in the cryptocurrency industry expect a drop in the market In the coming months. Investors are therefore taking steps to protect themselves against a potential temporary price crash by reducing derivative contracts.
A derivative contract, or futures contract, is a financial instrument that allows traders to speculate up or down on the value of an asset. These tools are massively used by traders, whether in the context of the crypto market or the stock market. The reduction in the use of these contracts means that a period of uncertainty hangs over the markets.
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Investors fear Bitcoin price drop in March
Glassnode claims there is “a clear uncertainty” investors regarding the month of March 2022. Next month, the US Federal Reserve will raise interest rates to contain inflation caused by measures to stimulate the economy during the pandemic. This decision, as late as it is inevitable, risks destabilizing the financial markets. This is why some observers expect a collapse of the cryptocurrency market in March 2022.
In this context, traders prefer close their positions on Bitcoin and other cryptocurrencies as a security measure. Glassnode indicators show that investors do not expect any bullishness in digital assets in the coming months. The trend is more towards the protection of assets.
However, the report does not augur a “mass outing motivated by fear or panic”. Despite the worrying economic context, investors do not resell their cryptocurrencies. “The main trend seems to be traders choosing to close their futures positions, rather than a hard sell/offer due to liquidations”explains Glassnode.
At the same time, Bitcoin holders continue to cling to their stock of cryptocurrencies. Individuals who have owned BTC for a long time hold on to the digital currency, confident that Bitcoin will eventually rebound. Since the October 2021 price explosion, long-term holders have only sold 175,000 bitcoins, showing that demand for BTC is still high. Glassnode highlights the presence of a “remarkably resilient cohort of hodlers (Editor’s note: long-term holders)” which holds a total of 13.341 million bitcoins.
