Next in Crypto: February’s Outlook

History doesn’t always repeat, but it certainly rhymes. February has generally been a bullish month for Cardano (ADA), Bitcoin (BTC), and the rest of the cryptocurrency industry. After recent ETF approvals and cooling inflation, we may be in for a volatile month ahead. Will the expectations of rate cuts later this year be enough to restore confidence in the market? This article explores historical crypto price action and what type of price action we may potentially see.

Historical Data

Bitcoin Monthly Returns. Source: Coinglass

Bitcoin

From market data available, 10 of the last 12 Februarys have been green for Bitcoin, indicating it is usually a bullish month for the token. The average gain in February for BTC is 12.13%, while the median is 11.68%. The highest gain was in February 2013, when Bitcoin surged by 61.77%, while the year with the highest loss was 2014, with a 31.03% drop. With February being a bullish month for Bitcoin a vast majority of the time, and the market currently emerging from a long bear market, there’s a chance this February will also see some positive price action for the token.

ADA

When examining token performance for February in previous years (2018–2023), ADA sees an average of 36.8% to the upside during the month. The year with the highest gains in February was in 2021, where ADA rose 279.01%. The year with the highest losses was in 2018, with a decline of -39.54%. ADA has had both positive and negative price action during February. It is harder to draw a conclusion as to what might happen, as ADA has not been around as long as Bitcoin, so there is less data available. Cardano has had a neutral start to the month, being down only -0.79%. Historically, ADA’s price has seen an average increase of 36.8% during the month of February, based on data from previous years.

ETF Influence

The Bitcoin Spot ETFs approved by the US Securities and Exchange Commission (SEC) earlier this year have definitely impacted the price. The speculation before approval was part of the reason why Bitcoin saw such positive price action towards the end of 2023, and also the reason for the price fall since, as holders of GBTC (Greyscale Bitcoin ETF), who were previously locked into the Greyscale Bitcoin Trust, are now selling their positions to either take profits, as GBTC had a nice discount in previous years, or selling to enter ETFs that have a better fee structure.

Most of the GBTC selling pressure has subsided, and now Bitcoin Spot ETFs have already amassed 3% of the token’s total supply, signaling a significant step towards institutional adoption. This, combined with the upcoming Bitcoin halving, could cause more bullish price action, and an accelerated timeline towards the bull run with increased buying pressure from ETFs. Bitcoin ETFs currently have a combined total market cap of $29.82 billion and are the fastest appreciating ETF asset ever in the history of financial markets, overtaking Silver ETFs and now second only to Gold.

Looking Ahead

While February has been mostly bullish for Bitcoin over the years, the landscape ahead is nuanced. Both Bitcoin and ADA’s historical February performance, coupled with lower inflation and the market’s emergence from a bear phase with less than 80 days to the Bitcoin halving, hint at possible outcomes. We may be in for one more final dip before the halving, potentially mitigated by the buying pressure from the newly approved Bitcoin ETFs. Moreover, geopolitical factors and their impact on oil prices and inflation could influence Federal Reserve decisions, affecting the crypto market indirectly.

Conclusion

February’s role in the crypto market is a multifaceted one, marked by historical bullishness for key players like Bitcoin and ADA, yet subject to the whims of broader economic and geopolitical forces. As we step into this volatile month, the complex interplay between ETFs, upcoming halvings, and macroeconomic factors will be crucial in shaping the market’s trajectory. Amidst this uncertainty, the only certainty is the dynamic and unpredictable nature of the cryptocurrency market, presenting a mix of challenges and opportunities for investors.