3 Reasons Why Bitcoin’s Price Soared To $45K In March

Bitcoin (BTC) expanded its gains, reaching nearly $45 thousand on March 1 as interest rate speculators slashed their bets on aggressive rate hikes in 2022 and whaling numbers spiked amid speculation that BTC is proving itself as an apolitical safe haven.

Traders cut half-point stakes for March

BTC’s price rose more than 4%, reaching nearly $45,000, a day after it registered its biggest one-day rise since February 2021, when a series of sanctions against Russia, including a ban on access to the global banking system SWIFT, raised concerns about their impact on global growth and inflation.

For example, swaps tied to the Federal Reserve’s mid-March meeting expected a 24.5 basis points (bps) tightening from March 1, 2022. That pointed to a 0.5 bps rate hike — which was approved 100% last month. by interest rate traders – is less common.

US Forward Swaps – Effective Rate of Federal Funds. Source: Bloomberg

Meanwhile, traders also lowered their expectations of the number of rate hikes in 2022 to five from seven just days ago, according to to Lisa Abramowicz of Bloomberg, who shared the following chart.

Implied overnight rate and number of walks/cuts. Source: Lisa Abramowicz

The Fed’s price revision to the outlook came as investor demand for safe havens, including US Treasuries and gold, has skyrocketed in recent days.

Bitcoin, which had previously lost more than half of its value amid fears of aggressive Fed rate hikes, also responded with a sharp recovery, partly due to reports that Russians were buying the crypto to evade sanctions.

“Bitcoin saw significant upward movement today as it appears to have somewhat regained its safe haven status as the conflict between Russia and Ukraine continues to intensify,” said Walid Koudmani, an analyst at XTB Market. told Bloomberg.

Data provided by crypto research firm CoinMetrics also showed a significant spike in the number of addresses with at least 1,000 BTC, which are typically considered “whales” by the industry. Their number increased from 2,127 on February 27 to 2,266 on February 28.

Bitcoin addresses with a balance greater than 1K BTC. Source: CoinMetrics, Messari

To 25fps or not to 25fps

Raphael Bostic, president of the Federal Reserve Bank of Atlanta, favorite a 25 basis point rate hike at the Federal Open Market Committee meeting in late February. Nevertheless, he also said a higher-than-expected level of inflation could have him “looking at a 50 basis point move for March”.

Related: 2 Key Derivatives Statistics Indicate Bitcoin Traders Expect BTC To Hold $40K

But ecoinometrics analyst Nick argues that the crisis between Russia and Ukraine has now forced the Fed to walk on shaky ground. As inflation is likely to remain higher on the back of higher oil prices, he explained, an overly aggressive rate hike in March could risk the stock market collapsing.

“Inflation is so high that we can probably afford a stock market dip to -20%,” he said wrote

“But below that, they will have to recall the tightening or risk a multi-year bear market.” […] Of course, that’s not good for Bitcoin.”

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Coin-Crypto.com. Every investment and trading move involves risks, you should do your own research when making a decision.

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