About to close the month of March, the price of bitcoin currently shows an appreciation of 8.15% in that period. In recent days, this growth has been accentuated to the point that the price has increased by 25% since March 13, to exceed USD 47,000. In the midst of this boom, there are several factors and decisions in the short and medium term that can have an impact on the price of bitcoin.
Among the news that may affect the price is the European Parliament’s vote this Thursday, March 31, on a proposal to identify transactions with bitcoin and other cryptocurrencies, as reported by CriptoNoticias. Regarding the Russian invasion of Ukraine, bitcoin has appreciated 35% since the start of hostilitiesalthough investors remain attentive to the development of the conflict, still with the potential to influence price action.
The expectations of the growth of inflation in the United States in the month of March, whose announcement is expected on April 11, is another event with potential impact on the price of the pioneering cryptocurrency. It is also expected that the close of the first quarter of 2022, which up to now shows an appreciation of 2.3%, could moderately influence the behavior of the price.
More scrutiny from Europe on Bitcoin transactions
This Thursday, May 31, the European Parliament will vote on a proposal that requires the identification of transactions with bitcoin and other cryptocurrencies in the eurozone, as reported by CriptoNoticias.
It is a regulatory adjustment so that all transactions with bitcoin and other cryptocurrencies are traceable, and also identifiable with user data. The bill contemplates that digital asset providers apply the so-called “travel rule” to operations. This implies the registration of all the data of who sends and receives the funds.
Depending on what provisions are approved in Thursday’s vote, it is likely that tighter scrutiny of bitcoin transactions in Europe could have a negative impact on the price.
Bitcoin is less sensitive to war in Eastern Europe
On the day of the start of Russia’s invasion of Ukraine, bitcoin experienced a 9% drop while gold rallied 3.5%. However, the incidences of the conflict do not appear to have had an effect on subsequent bitcoin price action. The first cryptocurrency has appreciated 35% since the start of hostilitieswhile gold only shows an appreciation of 4.13% in the same period.
In fact, in a recent analysis by Willy Woo, commented on Monday 28 by CriptoNoticias, this analyst affirms that while bitcoin is becoming stronger as an alternative for investors, there has been a decrease in investments in gold and traditional stocks.
Taking into account that Russia has decided to integrate bitcoin into its economy due to sanctions, what happens soon with Ukraine and the negotiations between the two countries may have an impact on cryptocurrency and traditional markets in general.
Bitcoin takes hold as a hedge against inflation
In the second week of each month, the United States Department of Employment publishes the Consumer Price Index (CPI) for the previous month, which reflects the magnitude of annual inflation in that country. Last February and March, the highest inflation rates of the last 40 years were recorded, as reported by CriptoNoticias, and both times the price of bitcoin was favored.
The Federal Reserve of the United States (the Fed) has estimated a significant increase in inflation in 2022, of 4.3%, compared to the 2.6% that it had provided as a forecast last December. Consequently, the record increases in monthly inflation in January and February are expected to be repeated or increased in March.
It is likely that the increase in inflation for March 2022 compared to March 2021, which will be announced on April 11, will be close to 8%, if the trend of recent months is followed, reported by CriptoNoticias. A positive impact of the bitcoin price could occur again, as it happened when the January and February results of annual increases of 7% and 7.5%, respectively, were announced.
A quarter with little variation for bitcoin
Two days from the close of March and the first quarter of 2022, the price of bitcoin has managed to recover from the decline since the beginning of the year. At the time of writing this article, the price of bitcoin is 47,200, which is 1.13% less than the price of 47,700 at the beginning of the year, according to the CriptoNoticias price calculator.
In the first month of 2022, which was recorded as bitcoin’s worst January since 2018, the drop was 17%. Thanks to the price recovery, which began on January 24, and continued in February and March, it has returned to the price levels of the beginning of the year. With the close of the quarter approaching, however, it will most likely result in a period of little change.
Historically the first quarter has been of negative returns or below 10%. There is one notable exception: the first quarter of 2021 in which a return of 102.93% was recorded. The fourth quarter of 2017, with 210.13% appreciation, maintains the profitability record since 2014, according to Skew Analytics. The firm assigns a return of 2.5% to what has elapsed in the first quarter.
If this quarter ends with a positive performance, it can influence the opinion of traders and generate a bullish sentiment within the market.
Current news of favorable impact for bitcoin
Some outstanding news of the week have influenced to maintain the upward trend that bitcoin has shown for two weeks. Among them, the bitcoin purchases, which began a week ago with 15,000 BTC destined to support the stablecoin Terra US (UST), as reported by CriptoNoticias.
On the other hand, last Monday the bitcoiner firm, MicroStrategy, notified to the Securities and Exchange Commission (SEC) that he had requested a loan of USD 205 million to buy more bitcoin and meet some corporate expenses. What is new about this strategy is that the loan is backed with collateral funds of USD 820 million in bitcoin, coming from its strategic reserve.