Is Bitcoin set to reclaim its safe haven status?

A hit to the trillion-dollar Risk Parity Fund segment whose strategy is to invest in bond and commodity markets to reduce the volatility on equity market investments.

Bucking the trend, Bitcoin closed ~5% higher, just below $40,000. The unusual moves across major asset classes, an indication of dislocation in financial markets.

Initially, the result of the impact of the war in Ukraine, sanctions on Russia and the spill over into the commodity space. Amplified after China locked down 40 million citizens in response to a surge in new coronavirus infections.

Speculation that China will be sanctioned if it decides to respond to Russia’s request for military support in Ukraine also playing a part.

Lockdowns in China will wreak new havoc on supply chains. From Apple which relies on parts from Foxconn based in Shenzhen, to car manufacturers Toyota and Volkswagen who have been forced to suspend their operations.

The disruptions news lockdowns will cause supply chains, equates to throwing Kerosene on inflation flames already burning.

Bitcoin’s resilience overnight has raised hopes that perhaps it can decouple from the risk complex and may reclaim its safe have status in these troubled times. 

However as can be viewed on the chart below, Bitcoin continues to trade in a bearish consolidation pattern and needs a break above resistance at $46,000 to negate the risks of a test and possible break of support near $33,000.

Source Tradingview. The figures stated areas of March 15th, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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