Bitcoin lacks the upward momentum

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.

The fact is that, despite staying above the 200-day moving average, it remains stuck below the 50-day moving average and the 20-day exponential moving average. 

So despite there being some good news, currently it has no bull momentum. 

The key indicators for Bitcoin in Nansen’s analysis

In the latest market research, Nansen points out that the lack of conviction towards a possible bull is clearly confirmed by the flow framework of spot BTC ETFs, as for almost nine consecutive days there were rather significant net outflows, interrupted only by one day of net inflows.

To all this, it is also added that their BTC Momentum indicator continues to oscillate above and below the neutral level, making it difficult to identify a clear bull or bear direction.

The best strategy for Bitcoin traders according to Nansen

In light of this, they conclude that for short-term traders, a strategy could be to buy near events with the maximum potential for fear, and to sell at the peaks of local optimism.

They specify, however, that although in theory such short-term strategies could also work, they are not their favorites.

The analysts at Nansen are currently looking for clearer signals. 

For example, they are waiting for a consolidation of prices, that is, when the price slowly begins to record increasingly higher lows, and the end of the noisy period of uncertainty linked to the Trump tariffs.

But they are also waiting for the stabilization in the stock market of tech stock prices, now that the moving average of Nvidia’s prices is turning downward, and a rebound in US macroeconomic data. 

In addition to that, they are also monitoring the stock market performance of Coinbase’s COIN stock, particularly concerning the growth of the stablecoin USDC in partnership with Circle.

“`html

The problem of tariffs

“`

One of the problems causing greater uncertainty is the developments in US politics, particularly regarding tariffs and the regulation of criptovalute.

Regarding tariffs, what matters most is the impact of changes in U.S. trade policy on Chinese exports and on key sectors such as automotive and agriculture.

All this has generated an increase in stock implied volatility (VIX) above 20 points, due precisely to the uncertainty regarding the interpretation that must be given to the political directions and the main intentions of the U.S. administration, namely whether they are pro-business, protectionist, or on the verge of irrationality. 

Some of these policies, in fact, might make sense for the economy of the USA.

In fact, the threats of tariffs push some foreign companies to go and invest in the United States, especially when it comes to knowledge and products with high added value, and this can be useful for productivity and long-term economic growth. 

According to Nansen, even reciprocal tariffs could make sense, because if a country imposes higher tariffs on US goods, then it makes sense for the US to use them to apply pressure for them to be reduced. 

But there are also some tariffs that seem to have propaganda purposes, to satisfy the protectionist electorate.

The Nansen report defines them as “ideological duties” because they affect low value-added industries such as metals, aluminum, and the agricultural sector, while it probably makes more sense to import those goods from abroad rather than produce them locally. 

Furthermore, they believe that the additional proposed tax cuts have a “populist” flavor, because they favor handouts, social security payments, and overtime.

They write: 

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

The stagflation risk

The problem with all this is that the USA now risks stagflation, if not even a recession in the long run. 

For example, the latest survey from ISM Manufacturing reveals that new orders are down by -6.5 points, and prices are up by 7.5 points.

At this point, Nansen’s analysis states that a general investment strategy for TradFi and crypto would be to wait for the noise to pass and for the “good announcements” to arrive, probably in the spring when the discussion on the tax cut package with Congress will begin. 

Furthermore, it argues that regulatory changes that benefit corporate cryptocurrencies will likely be favorable for the crypto sector as a whole.

So on one side, possible risks emerge, while on the other, possible opportunities. 

However, in this phase of great uncertainty, it is really difficult to identify a clear trend, either upwards or downwards. It will probably be necessary to wait a little longer before having a clearer and less uncertain picture, and this could happen between the end of March and the month of April, although the phase of difficulty could also extend until June.