Digital currency, the most powerful in the world that has the biggest market capitalization of all digital assets, is eyeing the best performance in its entire history during the first quarter of 2024. As of March 5th, the price is nearing $66K, having almost reached its 2021 all-time high levels. This is important to note because the halving event is still more than a month away. The fact that Bitcoin is doing so well before the event is proof of the coin’s resilience even in the face of adversity and that the asset is finally maturing and becoming stronger. Investors are aware of these features and are starting to buy Bitcoin in higher numbers in order to consolidate their portfolios and secure their future.
Open interest
In the crypto field, open interest refers to the cumulated number of outstanding BTC futures contracts or options. The measure shows how much money is invested in derivatives at any time. A Bitcoin rally will naturally have an effect on these figures as well. The increase indicates that the bull market is finally picking up speed. However, some believe that the market might be in danger of overheating, and the approach of record numbers in open interest can signify volatility and corrections. As such, many investors and analysts discuss the importance of sticking to a strategy in order to avoid getting carried away by the rallied prices.
February has been a stellar month for Bitcoin, with the prices climbing by over 50%. Now, the price is close to its all-time high of 2021, which occurred in the aftermath of the 2020 halving. Many hope that this time around, the gains will remain undisturbed for longer. During the previous cycle, the corrections of 2022 caused over 70% of the profits to melt in a matter of just a few months.
Funding rates
The Bitcoin perpetual futures are derivative contracts without an expiration date. This feature allows investors to speculate on the prices indefinitely and has made it particularly popular among market traders. In the last week of February, the funding rates present in these assets went above 100% for the first time in over twelve months. That is another unquestionable sign that the market is going bullish. There has also been a climb in classic derivatives positions, including both sell and buy positions.
The considerable price movements coupled with the mounting open interest are often regarded as a warning sign by analysts, who believe that investors using leverage positions should be especially mindful of the fluctuations. On March 4th, open interest stood at $31 billion, overcoming the $24.3 billion from April 2021. Bitcoin has surpassed some of its previous records in currencies other than the United States dollar as well, namely the Japanese yen and the Argentine peso. The latter, subjected to incredibly steep inflation rates, has taken the backseat for many locals, being replaced with crypto that can hold its value better and for longer. The growing interest in cryptocurrencies has led to a surge in financial products tailored to the cryptocurrency community, although their impact on global finance remains relatively limited.
Froth
The froth refers to all the conditions that appear before the rise of a market bubble. What the environment is witnessing at the moment is a clear sign of that. But what can investors do to ensure their portfolios remain stable and that losses are kept at a minimum? Well, for starters, it’s crucial to have a solid strategy and stick to it. Psychologically, it can be complicated to abstain from engaging too much in such a market, as the fear of missing out is a potent motivator.
It’s important to not stray too far or too often. The risk of losing money is particularly elevated during this time. Option traders must get their information not just from green candles, but more complex data and charts as well. If you prefer the buy-and-hold method, you must be aware of the possibility of volatility to avoid buying for a very high price. During this time, it’s crucial to hold on to your assets. They’re very likely to yield considerable gains.
Staying calm during a crypto market is crucial in order to keep your gains consistent. Remember that the bull run will continue over the course of the following months, so there are plenty of opportunities to try something riskier later on if you feel your assets can handle it. But you cannot put your portfolio through several high-risk situations and transactions without losing capital as well.
GBTC outflows
The Grayscale Bitcoin Trust is dealing with large outflows, an event that is noteworthy considering the fact that the prices have continued to move upwards unperturbed. The tally for March 4th passed half a billion dollars, and traders believe that the trend will only accelerate further above the $60,000 level. Although its levels are decreasing every day, GBTC remains a market leader in investment vehicles, with holdings exceeding $28.9 billion.
But what is the reason for these massive movements? The GBTC exodus began as early as January, and many consider the fees to be the main culprit. Grayscale still has some of the highest fees on the market, and while some of the newer funds are cost-free, investors can still see the difference. To stop the trend, the company must lower the fees aggressively; otherwise, it won’t be able to maintain its place in the market.
Euro
Bitcoin has recently surpassed a euro all-time high as well. It managed to reach 60,393 euros on March 4th, climbing approximately 5% compared to its intraday lows. This is just one of the many milestones Bitcoin has either reached or surpassed during February and the early days of March. Undoubtedly, there are many more ahead, especially with the halving set to launch in April. Bitcoin has also managed to surpass the Chinese yuan in the first months of 2024.
As of March, Bitcoin is worth roughly 467,506 yuan, a considerable climb compared to the previous level of 414,000 yuan. Angel investors have discussed the fact that Bitcoin broke its own records in thirty other countries, including South Korea, Japan and India. The Swiss franc, Brazilian real, Mexican peso and British pound remain undefeated, but with the rapid pace at which the market progresses, that isn’t a certainty.
If you’re an investor as well, you must remember that there’s nothing as important as protecting your assets during a time of market fluctuations. This is the only way to have consistent progress and ensure you keep seeing gains.