With tax season extended as a result of the coronavirus pandemic, it will be interesting to see how the price of Bitcoin will play out during a time that typically benefits the leading cryptocurrency. Around tax season time, Bitcoin typically charges forward with the tailwinds of momentum behind it and if history can repeat itself, this bodes well for Bitcoin bulls.
“One interesting historical cycle we have observed in the past few years is Bitcoin tends to trade with upward momentum (+30-50%) going into April and May,” a Forbes article noted. “This strength coincides with the duration of tax season as investors re-enter the markets after harvesting tax losses and having rebalanced their portfolios. Bitcoin could continue this season of price appreciation, as the digital asset is well positioned fundamentally.”
Futures trading, in particular, reflects the bullish sentiment—but can the actual price follow in tow?
“Bitcoin futures tend to be a good gauge of traders’ sentiments on future expectations of BTC price, the report added. “The bulk of last week has seen futures trading at a backwardation to spot, however, this appears to be changing as June futures are trading mixed with a slight skew to contango, while September contracts are painting a more robust contango picture. This implies that the overall sentiment of traders is turning slightly positive, especially towards the longer term, which is in line with our in-house view that a price surge should capitalize a few months after the halving event.”
“Gold, silver, the stock markets, and the digital assets market are all doing fairly well today,” said Mati Greenspan, founder of financial advisory firm Quantum Economics, in regards to last Thursday’s trading session. “It seems as if the massive cash hoarding phase may finally be over and investors are ready to put their money back to work. Bitcoin is up nearly 10% over the last 24 hours and is regaining a lot of its dominance over the rest of the crypto market.”
“While the uses of blockchain technology are widespread and growing and overtime may underpin the price of bitcoin, at the present time, bitcoin is just another tradeable asset with no safe-haven value, especially when markets turn sour,” Cawley said.
Opportunities for exchange-traded fund (ETF) investors in blockchain include the Reality Shares Nasdaq NexGen Economy ETF (NASDAQ: BLCN). BLCN seeks long-term growth by tracking the investment returns of the Reality Shares Nasdaq Blockchain Economy Index, which is designed to measure the returns of companies that are committing material resources to development, researching, supporting, innovating or utilizing blockchain technology for their proprietary use or for use by other blockchain-focused companies.
For more market trends, visit ETF Trends.