Bitcoin briefly dropped under support at $45,000 before recovering as it heads toward a seasonally bullish April, a month that has chalked up gains for the asset in seven out of the past ten years, data show.
“No one knows for sure what’s the explanation for the usual ‘April’s Bull,’” shared Asaf Naim, CEO of bitcoin development company Kirobo, in a Telegram message. “Some speculate that it’s a psychological phenomenon tied to the beginning of spring.”
“After the bullish trend of mid-January until the end of February (that includes the aftermath of Christmas and the Chinese New Year) comes to a downturn, which later changes to a bull run in early April,” he added.
Bitcoin traded as low as $44,200 on Thursday night after a two-month-high of $48,000 on Wednesday. Traders, however, bid up bitcoin to support at $45,000. Losing current levels over the weekend could see bitcoin drop to $43,400.
Bitcoin dipped under $45,000 support on Friday. (TradingView)
The drop came amid recession fears as 5-year and 30-year US Treasury yield curves inverted for the first time since 2006 on Monday. Observers say yield curve inversions – selling short-dated treasury bonds to purchase long-dated bonds – occur prior to periods of recessions as traders bet on concerns about the health of the economy.
Still, some analysts point out a seasonally bullish April could see bitcoin recovering and moving upward in the coming months, alongside positive growth in broader markets.
“It should be mentioned that April is also a strong month for stock markets,” Alex Kuptsikevich, senior financial analyst at FxPro, told CoinDesk in an email. “The new month begins with optimism and the mood to look for a moment to buy on a decline, especially given the dense influence of institutional sentiment on the dynamics of bitcoin.”
Big bitcoin targets are back
Some traders have called for a short-term target of $53,000 for bitcoin in the coming months. Long-term targets are even grander: strategists at institutional fund VanEck said in a recent note that each bitcoin could be worth as much as $4.8 million if it becomes the global reserve asset. The theory is based on the idea that central banks may diversify their reserves and begin allocating towards cryptocurrencies.
Meanwhile, Kirobo’s Naim said that bitcoin was likely propped up by demand from Russian traders earlier in March 2022.
“We can’t ignore the connection between the price of bitcoin and the price of the ruble,” said Naim. “Many Russians turned to bitcoin to seek some hedge against their assets and bought bitcoin (and other tokens) in droves.”
However, there could be some reason for caution in the coming days. “But now when the ruble seems to be recovering, this has a negative correlation with the price of bitcoin,” Naim said.