Bitcoin and Crypto market is highly influenced by “outside factors” such as inflation, fiscal policy, and regulation. These were the findings of OKLink Annual Insights 01.
OKLink in its latest insights, Global Crypto Market 2022/Q1, revealed that these factors are still influencing the trend of Bitcoin to varying degrees.
Additionaly, the blockchain firm found that Crypto is now mainly affected by two external factors: monetary policy & geopolitics. According to OKLink insights, Under the influence of these two external factors, Bitcoin price bottomed twice on January 24 and February 24.
Interest rate hikes resulting in negative sentiment
Monetary policy mainly refers to the interest rate hikes and balance sheet adjustments by the Federal Reserve and central banks. According to OKLink analysis, the negative sentiment brought to the market by the expectation of interest rate hikes, the price of Bitcoin fell for several days before the Fed rate meeting (January 26), and the bottom of Bitcoin Q1 price appeared: $32,989, a drop of 20.86% compared to January 1.
Geopolitical Uncertainty
OKLink analysis found that the current geopolitical uncertainty due to the ongoing Russian-Ukrainian military conflict is hampering the market. Since the outbreak of the conflict, NATO countries have imposed a series of sanctions on Russia, and Russia is a major exporter of natural resources and agriculture, resulting in shortages of crude oil, wheat, natural gas and other commodities, resulting in rising prices, and oil prices in Italy and other European countries have broken through 2.2 EUR/L.
The surge in energy and agricultural prices has led to higher costs for other products in the supply chain, which is ultimately reflected in the consumer price index (CPI). The year-on-year increase of the CPI index in the United States in January and February continued to break new highs, reaching 7.5% and 7.9% respectively. The increased risk of uncertainty caused Bitcoin to bottom out for the second time in late February, at $ 34,322 .
As the interest rate hike is a foregone conclusion, the situation in Russia and Ukraine tends to be negotiating, the negative sentiment is gradually digested , and the final monetary policy is in line with market expectations. In 2022 Q1, the price of Bitcoin began to rebound after bottoming out twice, reaching a maximum of $48,200 in 2022. At the end of the first quarter of the year, it finally closed down 3.33%.
Crypto Declines Excluding Stablecoins
Not so surprisingly, OKLink analyis found that the overall market value of Crypto has decreased by 2.27% in Q1 2022 compared to Q4 2021 with the weakening of the market. However, the market value of stablecoins has risen steadily driven by the strong market demand.
Positive: Institutions continue to increase their holdings of Bitcoin
The decling Bitcoin prices in the begining of 2022 has not stopped institutions and public companies from continuing to accumulate Bitcoin. This indicates that the value of Bitcoin is not only optimistic about the mainstream for a long time, but also can be used as an important asset in the company’s balance sheet.
Among the listed companies, MicroStrategy holds the largest amount of Bitcoin. The company has been hoarding Bitcoin since August 2020. As of Q1 2022 , it held a total of 129,218 BTC , worth $ 5.8 billion, which even exceeded the market value of MicroStrategy 3 times the holdings of the second-place Tesla.
The report mentioned that not only listed companies, but also the Luna Foundation Guard, an important public chain in the Crypto circle, is also accumulating Bitcoin. LFG purchased 35,000 BTC in just one month, worth $1.6 billion. LFG hopes to become an important support for the market value of UST by incorporating Bitcoin into the UST endorsement system .
NFT quarterly transaction volume hits record high
The total transaction volume of NFTs in Q1 2022 has increased significantly, reaching $11.397 billion, an increase of nearly 40% compared with $8.143 billion in Q4 2021, and a year-on-year increase of 2,156 compared with US$505 million in Q1 last year.
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