Analysis of Bitcoin’s Price by Nansen

A recent analysis by Nansen on the price of Bitcoin reveals that there is no strong conviction regarding possible further bull movements at this stage.

Despite staying above the 200-day moving average, Bitcoin remains stuck below the 50-day moving average and the 20-day exponential moving average, leading to a lack of bull momentum.

Key Indicators for Bitcoin

In the latest market research, Nansen highlights a lack of conviction towards a potential bull market, confirmed by the flow framework of spot BTC ETFs, which experienced significant net outflows for almost nine consecutive days, only disrupted by one day of net inflows. Additionally, their BTC Momentum indicator continues to oscillate near the neutral level, complicating the identification of a clear direction.

Best Strategy for Traders

Nansen suggests that short-term traders might consider buying during times of maximum fear and selling at local optimism peaks. However, they express a preference for clearer signals, such as price consolidation and the stabilization of tech stocks, particularly Nvidia. They also monitor Coinbase’s COIN stock, especially related to the growth of stablecoin USDC in a partnership with Circle.

The Problem of Tariffs

U.S. political developments, especially regarding tariffs, contribute to significant uncertainty. Key factors include the impact of changes in U.S. trade policy on Chinese exports and major sectors like automotive and agriculture. These issues have raised stock implied volatility (VIX) above 20 points, reflecting uncertainty about the U.S. administration’s political direction, whether it is pro-business, protectionist, or irrational.

Nansen notes that while some tariffs could promote U.S. investments in high-value sectors, others seem to have propaganda purposes, affecting low value-added industries, which may not make economic sense. The proposed tax cuts are viewed as populist, benefiting social security and overtime payments without clear growth benefits.

> “Overall, this category of tariffs appears inflationary, without a clear impact on growth.”

Stagflation Risk

The U.S. risks stagflation or long-term recession, as indicated by an ISM Manufacturing survey showing a -6.5 point drop in new orders alongside a 7.5 point rise in prices. Nansen recommends that both TradFi and crypto investors wait for clearer signals and favorable announcements, possibly around spring 2024 when discussions on tax cuts with Congress begin.

While risks and opportunities are present, the current phase of uncertainty makes it difficult to identify a definitive trend. A clearer picture may emerge between late March and April, though challenges may persist until June.