As of today, Bitcoin has completely erased the losses it saw at the start of the year.
Within the first 30 days of 2022, Bitcoin’s price fell from $47,733.40 to $35,070.10 and has since struggled to regain ground.
But lately, there have been a few catalysts for upward mobility.
Last week, Treasury Secretary Janet Yellen said she still has “a little bit of skepticism” about cryptocurrencies during an interview with CNBC, adding that payment system innovation can be a healthy thing. She’s so consistently been outright negative on cryptocurrencies that the measured comment was a significant change.
There’s also the compounding effect of Bitcoin’s price reaching what’s considered a milestone because it would mean the asset is no longer in the red for 2022.
The recent price activity could be a sign that the fear, uncertainty and doubt (often referred to with the acronym “FUD”) generated by Russia’s invasion of Ukraine and COVID-19 have started to subside, according to CryptoBoost CEO Isaac Tebbs.
“There has been a shift in the macro environment, with many investors viewing Bitcoin as oversold in the $30k-$40k range,” he told Decrypt in an email. “This may be due to Russia and COVID fears subsiding.”
Tebbs, who said his marketing company works with a lot of Terra-based DeFi projects, also pointed to the fact that Terraform Labs CEO Do Kown recently said he would buy billions more Bitcoin to fund the Terra protocol’s official wallet to back its TerraUSD (UST) stablecoin.
It’s worth noting, however, that it hasn’t actually happened yet. As of Monday afternoon, the balance held in the wallet sat at $1.3 billion after Kwon said last week Terra had raised a total of $3 billion to seed the reserve and are aiming to raise $10 billion total.
It's not 10B today - as UST money supply grows a portion of the seigniorage will go to build BTC reserves bridged to the Terra chain
We have 3B funds ready to seed this reserve, but technical infrastructure (bridges etc) is still not ready yet.
— Do Kwon 🌕 (@stablekwon) March 22, 2022
Despite the positive price action, Pratik Gandhi, head of marketing at Covalent, said it’s too soon to celebrate an end to price turmoil for Bitcoin. He won’t consider the turbulence over until the price has held onto its current gains for at least another week.
“Most of the recent price action has been highly influenced by the overall macro market sentiment and tracking equities,” Gandhi told Decrypt. “The other factors adding up to these external forces are derivatives and whales involved in high-volume trading.”
Even though Bitcoin has often been called a safe haven asset, where investors move their money when traditional markets dip, it has followed the traditional markets since stocks crashed at the onset of COVID. In fact, the correlation between Bitcoin and the S&P 500 index just reached a 17-month high.