Bitcoin ( BTC ) saw its gains increase to nearly $45,000. This was due to interest rate speculators reducing their bets for aggressive rate hikes by 2022. Additionally, the number of whale addresses jumped amid speculations that BTC may be proving itself an apolitical safe haven.
March: Traders lower half-point wagers
BTC’s price soared by more than 4% to nearly $45,000 a day after recorded its largest one-day increase in February 2021. This was amidst a flurry sanctions on Russia including a ban on accessing the global bank system SWIFT. These actions raised concerns about their impact on global growth as well as inflation.
Swaps that were tied to the Federal Reserve’s March meeting in mid-March anticipated a 24.5 basis points (bps) tightening starting March 1, 2022. This indicated that a 0.5-bps rate rise — which was approved by interest rate traders at 100% last month — is less likely.
US Forward Swaps – Federal Funds Effective Rate. Source: Bloomberg
Traders also decreased their expectations for rate hikes in 2022 from seven days ago to five , according to Lisa Abramowicz of Bloomberg, who shared this chart.
Implied overnight rate and number of hikes/cuts. Source: Lisa Abramowicz
As investors demanded safe-havens including U.S. Treasuries, gold and other assets, the Fed outlook was reshaped.
Bitcoin lost over half its value earlier due to Fed rate hike fears. However, it has seen a sharp recovery, partly due to reports that Russians were buying crypto to circumvent sanctions.
“Bitcoin saw a significant upmove today as it seems to have slightly regained their safe-haven status, while the Russia-Ukraine war continues to intensify,” Walid Kudmani, an analyst from XTB Market, said to Bloomberg.
CoinMetrics data also revealed a significant increase in addresses that hold at least 1,000 BTC. This is often referred to as “whales” in the crypto industry. Their number increased from 2,127 on February 27, to 2,266 by Feb. 28.
Bitcoin addresses with balance greater than 1K BTC. Source: CoinMetrics, Messari
To 25bps, or not to 25bps
President of the Federal Reserve Bank of Atlanta Raphael Bostic favored an increase of 25 basis points at the Federal Open Market Committee meeting at the end of February. He also stated that a higher inflation reading than expected could lead him to “look at a fifty-basis point move for March.”
Similar: Two key derivatives metrics indicate that Bitcoin traders expect BTC will hold $40K
Nick, an Ecoinometrics analyst, argues that the Fed has been forced to take a risk by the Russia-Ukraine crises. He explained that inflation is likely to rise due to higher oil prices. A too aggressive rate increase in March could lead to the stock market crash.
He wrote that “Inflation has reached such a high level that we can afford a stock exchange dip all the way to -20%.”
“But below that they’ll need to call back tightening or risk a multiyear Bear Market . Of course, that’s not good news for Bitcoin.”
These views and opinions are the author’s and do not necessarily reflect those of Cointelegraph.com. You should do your research before making any investment or trading decision.
