Bitcoin may find itself vulnerable to macroeconomic challenges in the coming month, despite receiving positive regulatory support. The leading cryptocurrency is projected to end February down by 19%, marking its most significant decline since June 2022, as a broader risk-off sentiment this week has driven it to a three-month low, leaving it over 25% below its all-time high. Investors express skepticism regarding a rebound in March. Historically, Bitcoin’s performance in March has been unpredictable; it has closed in positive territory only six times in the past 12 years and hasn’t recorded a loss in March since 2020. Nonetheless, its average return for March during the same timeframe stands at 13%, according to CoinGlass. “Macro factors will remain the primary influence over the short-term performance of digital asset prices,” stated Mike Colonnese, an analyst at H.C. Wainwright, to CNBC. “Austerity measures implemented by the government, new tariffs on imports from Canada and Mexico set to take effect in March, along with persistent inflation, have all contributed to a risk-off environment.” BTC.CM= 1M mountain Bitcoin is on track for its worst month since 2022. “We are neutral in the short-term, expecting Bitcoin to stabilize within the mid-$80,000 to low-$100,000 range until new crypto-specific catalysts emerge,” he added. “That said, we remain optimistic about the medium-term outlook, thanks to regulatory support and increasing institutional adoption.” Headwinds versus tailwinds. Bitcoin started the year with a rally, driven by positive expectations surrounding potential changes the new Trump administration would bring to the crypto sector. However, since the president’s long-awaited executive order on crypto was issued at the end of January, crypto investors have been left with little to anticipate. This is true even as the Securities and Exchange Commission has moved quickly on various cases inherited from the previous administration. In February, the agency concluded its enforcement case against Coinbase; closed investigations into Robinhood’s crypto unit, Uniswap, Gemini, and Consensys without enforcement actions; reduced the size of its crypto enforcement unit; and on Thursday night, clarified that meme coins do not qualify as securities. While optimism regarding the long-term benefits of Trump’s crypto policies persists, without a distinct catalyst, Bitcoin’s price movements may continue to be influenced by macroeconomic dynamics. Several analysts have cautioned that Bitcoin could revert to pre-election levels near $70,000 before any upward movement. “In the short term, [crypto] markets appear quite vulnerable, partly due to the macroeconomic environment,” noted David Duong, Coinbase’s head of institutional research. “There are numerous concerns regarding tariffs that were previously not fully factored into the markets. However, it appears these issues are now being accounted for, especially with negative survey data contributing to fears about the broader U.S. growth narrative.” Investors are keenly awaiting the February consumer price report set for March 12, along with the Federal Reserve’s two-day policy meeting starting March 18. Silver linings. Joel Kruger, a market strategist at LMAX, mentioned that March could present an opportunity for Bitcoin to showcase its value as a portfolio diversifier. “If global markets experience intensified stress, Bitcoin could stand out,” he remarked. “There may be a point—if it drops to the $70,000 to $75,000 range—where Bitcoin demonstrates it’s not directly correlated with stocks and overall risk sentiment, potentially showing its qualities as a store of value.” “Amid the setbacks, there will be a silver lining,” he continued. “It will allow Bitcoin to exhibit its intrinsic properties, further enhancing its maturity as an asset.”
