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Why the historically bearish month of March may surprise investors this year

March may surprise investors
March may surprise investors

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March hasn’t been the best month for the cryptocurrency market, historically speaking. If anything, it has been one of the worst months, which has a record for painting the market in the red.

While long-term investors are pretty resilient to the token’s unexciting performance, short-term investors are on the edge of their seats as they struggle to keep their portfolios in the green. This time, however, March may come with a surprise and might break the long following tradition of a bearish month.

March Remains A Loss Making Month For Bitcoin

Bitcoin is the number one cryptocurrency in the world, with a market dominance of over 40%, and also the first cryptocurrency to ever be introduced. BTC has been around for a decade and is pretty much representative of the market-wide performance.

Most cryptocurrencies in the market, or at least the top 50, mimic the price performance of Bitcoin during a bull run. And collectively account for over 90% of the total market capitalization of cryptocurrencies.

Understanding the historical price performance of bitcoin in March can provide insight into how the cryptocurrency market has maintained itself in March.

In 2011, bitcoin was trading at $0.79 after falling by 8.2% in the month of March and 0% in the same month of the following year. The year 2013 broke the pattern, where bitcoin rose by a massive 175% in the month of March, closing the month at $92.19. The blockchain also underwent halving in 2012, which was in part responsible for this pump in price.

Halving is a process where the block reward of bitcoin for miners is slashed by half after every 210,000 blocks have been mined. On average, this event takes place every four years and has been recorded to happen in 2012, 2016, and 2020. The next bitcoin halving is expected to take place in 2024. The after-effects of halving have been pretty evident in the market, and have caused the subsequent bull runs historically.

Returning back to its original form, bitcoin consecutively recorded losses in the month of March for the next five years after 2013. Where it fell by 16.9%, 4%, 4.8%, 9.2%, and 32.8%, from 2014 to 2018. The year prior, bitcoin underwent one of its most notable bull runs, a year after the halving cycle in 2016.

The next year for bitcoin was reminiscent of its performance in March 2013, where the token diverted from recording consecutive lows to rising by 7.9% in March 2019. This didn’t last long as the token fell by a massive 24.8% in March 2020, as a result of “Black Thursday” where the crypto market, along with the equities market plummeted to significant lows from the panic around the pandemic.

Notably, bitcoin fell by over 50% in just a single day on 12th March 2020, from above $8,000 to a bottom of $4,000. Two months later, bitcoin underwent its third halving event, where the block reward was cut to 6.25 BTC from 12.5 BTC.

The next two years were quite dramatic for the token, where it noted an increase of 30.2% and 5.4% in March 2021 and 2022 respectively. Although, the token soon plummeted in both these years, after peaking in April and March, for the respective years.

March 2023 Might Break The Historically Bearish Cycle

2023 hasn’t been any less than a relief for cryptocurrency investors, many of whom have witnessed their portfolios climb back to green, after an underwhelming 2022 that displayed a consistently declining performance. With the most recent decline being triggered by the FTX collapse.

Bitcoin is up by more than 35% since the start of the year, while ETH is up by over 30%. Most of these gains were made in January itself, while February was relatively slow. Traditional markets have also rebounded this year, with the S&P up by 3% so far. Now that we’ve entered March, cryptocurrency investors are curious as to what the month has on hold for them.

March, this year, is expected to come with good news, and continue the trend of an uprising as it has been for the past two years. And there are several factors that could influence this pump, and here are a few critical ones you must be aware of.

For starters, there is increasing adoption of cryptocurrencies among institutional investors and organizations. Such as MicroStrategy allocating a majority of their holdings to BTC, and Tesla investing billions of dollars in Dogecoin, along with introducing Dogecoin as a method of payment to purchase their merchandise.

Cryptocurrency is also being widely made available as a method of payment. For instance, PayPal has begun to offer cryptocurrency payment options that have led to an increased demand for cryptocurrencies. In addition, Mastercard recently included cryptocurrencies in its offerings.

Bitcoin has received governmental acceptance, as El Salvador was the first one to allow the token to be a legal tender, and although it was a while ago, other countries are expected to follow suit. China too has launched its Digital Yuan, which has helped increase the confidence around digital assets and thus diverted a lot of new users to adopting crypto.

The cryptocurrency was also a part of Ukraine’s Defence strategy during the Russia Invasion, where it received about $60 million in donations in crypto.

Plus, the inherent argument for cryptocurrencies to act as a hedge against economic uncertainty has picked up recently, as seen by the gains made in the market during the pandemic. Investors are constantly moving towards using BTC as a hedge for situations where traditional markets are likely to underperform.

Taking into account all the factors that have aided the growth of the market so far, it’s expected that March will continue to have momentum. Investors may be in for an uptrend, instead of the bearish trajectory bitcoin has followed in March every year.

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