April 2020 Crypto Outlook...

Why The Crypto Rally Could Intensify in April...

Welcome to the April Crypto Outlook with Contentworks, an agency specialising in content marketing for financial services, crypto and blockchain.

March was a difficult month for the crypto markets. Actually, it was a difficult month for everyone! In the past 30 days, most cryptocurrencies declined by more than 10%. Ethereum dropped by more than 40% while XRP and BTC dropped by more than 28%. At the same time, March was a month of recovery as BTC rose by more than 40% from its monthly low.

BTC, ETH, and XRP dropped in March

BTC, ETH, and XRP dropped in March

Why Bitcoin Dropped in March

There were several reasons why the price of Bitcoin and other cryptocurrencies dropped in the past month.

First, the overall sentiment in the market was relatively weak as investors dumped their holdings. In March, major global indices like the Dow Jones, Nasdaq, DAX, and CAC dropped by more than 10% as investors worried about the impact of Coronavirus.

Secondly, the price dropped as more people moved to fiat currencies as more countries and states started lockdowns. In such lockdowns, fiat currencies like dollars, euros and pounds become more valuable because they are accepted in most retail shops.

Thirdly, most investors sold their crypto holdings to cover margin calls in other assets. Fourth, there was a lack of demand from institutional investors, who had seen their other holdings drop by more than 10%. Finally, and most importantly, there were concerns among investors about whether Bitcoin would survive a recession.

April Bitcoin Outlook

In April, the focus will remain on these issues. Investors will still be concerned about Coronavirus, which is continuing to kill thousands. The performance will depend on how long international markets will remain closed.

However, the outlook for Bitcoin and other cryptocurrencies will be better in April. This is because the perception among many investors is that the price has already bottomed. This could lead to more demand in the coming month.

 Another factor that will influence its price is the decision by the Federal Reserve to accelerate money printing, through the process of quantitative easing. The process, together with large stimulus packages could force many people to question the health of their fiat holdings. More so, people could learn from how the dollar weakened when the Fed started its first quantitative easing. Therefore, all this could lead to more inflows into the crypto market and push their prices higher.

In addition, May is approaching. Between May and June, the number of Bitcoin blocks distributed to miners will be cut into half (halving). This process reduces supply, which is a positive thing for the price since there will be demand. As shown on the chart below, the price of Bitcoin has risen before and after the previous two halvings.

Bitcoin price tends to rise before and after halving

Bitcoin price tends to rise before and after halving

Bitcoin April Technical Forecast

On the four-hour chart below, we see that the BTC/USD pair has pared back its earlier losses and is trading at the 38.2% Fibonacci Retracement level. The price has also found significant resistance slightly below the 7,000 level. Meanwhile, the pair has also formed a triangle pattern, which is nearing its tip. This implies that the price could soon breakout to the upside, and possibly move to the 78.6% Fibonacci level of 9,000.

Final Thoughts

Bitcoin has bounced back from its monthly low of less than $3,500 as sentiment in the market has improved. Similarly, gold too, has managed to recover from its March lows and is currently near its 7-year high. In April, we expect that BTC will make some significant gains as markets stabilize, demand rises, and halving optimism returns.

At Contentworks, our team of financial professionals closely follows market movements for FX, Crypto and other tradable instruments. We are proud to serve some of the biggest crypto and fintech companies in the world by delivering high-impact articles, videos, PRs and white papers.

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