Bitcoin leads its flock past $2 trillion

on March 28, Bitcoin hit a peak price of around $47,800 per token, marking its highest price since the turn of the year. more significantly, it represented a breakout of Bitcoin’s price from the $36,000 to $44,000 range that it had been bouncing between over the past three months. as usual, Bitcoin’s rise sparked a rally across the crypto market, pushing the total market capitalisation of such assets back over $2 trillion.

what is sparking this rally and what are its chances of lasting a while?

bull signs

one of the primary drivers of Bitcoin’s breakout is believed to be the largest conflict Europe has seen since WW2 potentially cooling off. this would mean a drop in price for energy related commodities, mainly oil. this would then help taper global inflation at a faster pace, since oil prices have a proportional impact on almost all goods and thus consumer budgets. less money to spend potentially means more for investments and crypto has been especially good at mopping those up over the past couple of years.

further, many corporate entities seem to think Bitcoin is primed for a rally. for example, the largest such entity by holdings - Microstrategy which holds over 110,000 Bitcoin - has taken out a $205 million loan to load up on some more. at the same time, Bitcoin mining is rapidly making the transition towards clean energy, negating one of its biggest criticisms. this may prove vital to avoid one aspect of regulatory sanctions such as the Chinese ban on mining in the future after the European Council narrowly voted against a similar move.

institutional investors elsewhere also seem optimistic, pumping money into NFT marketplaces and crypto exchanges at high valuations.

bear signs

India’s new crypto-tax regulations came into effect from April 1. the flat 30% rate on crypto gains, regardless of any slabs, other income or losses, in addition to the 1% TDS on every transaction is undoubtedly going to eat into profit margins, especially for active traders. given that some reports claim India has the largest number of individuals holding crypto, it will be interesting to see the impact of the new regulations.
another factor to consider is that the technical analysis of the long term (spread across years) chart of Bitcoin suggests its breakout may be capped around the $50,000 range. a rejection from that price would typically be the expected outcome, whereas a breakthrough from that range might spark a rally with even more fuel.

predicting the direction in which crypto assets go is a crystal ball affair, perhaps with even lesser accuracy. those sitting on gains from investments made in the past three months.