Digital Assets Market Review: Bitcoin and Ethereum TA for March

Chief Investment Officer Nathan Cox reviews the market for March. There was some exciting price action going into the end of March during the options expiration. Below you’ll find a link to the YouTube video and some key points written out for your review.

Bitcoin Price Action

 

What was once resistance between $40,000 – $44,000 has now become a support zone. We launched through February 8th, 2021, which was the announcement that Tesla was adding Bitcoin to their balance sheet.

This will forever be called the “Elon Zone.”

Starting in March, we really bounced pretty hard and then had a pullback and rocketed to new highs and touched the $61,000 area. We then had about an 18.3% pullback that lasted through the 25th of March.

We were building a wedge pattern of which we eventually broke through that at the end of March 2021. Overall, we saw muted action and didn’t see a 30% pullback we saw in February. We saw this play out in derivatives metrics. Implied Vol came down sharply and eventually steadily declined.

Expectations are still very bullish, especially after the Fed SLR announcement from the fed. There’s also a lot of coins leaving exchanges that signal long-term holders instead of short-term selling.

When looking at the put/call ratio, we found a bottom on March 25th, and then March 26th is when options expiration was, so we saw a lot of put interest come off as people were trying to hedge against all-time highs. This is less of a bearish indicator and more of an indication that more institutions are coming to the market and are hedging portfolios.

Ethereum Price Action

 

When looking at ETH, we very similar price action as it remains very correlated to Bitcoin. There was a big pullback in February and then a similar upwards move. ETH didn’t quite make all-time highs as there wasn’t as much headline-grabbing news like Bitcoin had with Tesla. There was a 21.7% pullback from peak to trough, but we maintained the upward trendline, which we kept on our radar.

Overall it was a lower volatility month, and we didn’t have a really deep pullback as we did in February. We didn’t see the implied volatility spike like we would have liked. Was there some big price manipulation going on during the big options expiration? That remains unclear.

Right around March 26th, 2021, we saw a big rally, and we’ve been moving higher ever since 9 out of 10 days. We’ve broken out of a wedge pattern that acted as key resistance for some time now. This would have been a nice time to buy calls, which we did for the Two Prime Fund because implied volatility was low.

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