Continuing its impressive start to 2023, Bitcoin (BTC 2.96%) registered its best month in more than 16 months in March, rising by more than 20%. And one of the world's most prominent investors thinks recognition of the value in Bitcoin's decentralized characteristics could lead to added demand.
Every month, Cathie Wood and her team of analysts at Ark Invest publish a report on the state of Bitcoin. As lovers of innovation in general, Wood and her firm are naturally fond of Bitcoin and its potential to disrupt the financial landscape.
And based on Ark's April report, Wood thinks that Bitcoin has taken center stage as the rest of the economy dealt with a series of bank failures that ultimately required the Federal Reserve and other regulators to intervene.
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Bitcoin to the rescue
In the report, Wood and her team highlighted that while a few regional banks shuttered and closed operations, Bitcoin continued its day-to-day operations just as it has for the last 14 years.
While some regional banks faltered in the U.S. and Europe this March, Ark analysts highlighted in the report that in the meantime Bitcoin "settled $650 billion, facilitated ~9 million transactions, issued ~26,000 new BTC at a steady and predictable ~1.8% inflation rate, attracted ~13 million new addresses, and generated ~$700 million for miners securing the network."
Best of all, it did all this without the need of any centralized company or government agency. Essentially, Bitcoin got to show off to the world what its true purpose is -- a decentralized payment network that runs 24/7.
Wood and her team believe this was part of the reason Bitcoin skyrocketed 23% in March, and at one point was up by more than 36% as news of the bank failures first started to circulate.
A crypto spring on the horizon
Not only did Bitcoin's price go on a tear, but a series of other metrics show that its network is in the midst of a resurgence.
At the top of Ark's list was the number of transactions. For the first time since early 2021, the seven-day average in the number of transactions topped more than 250,000 on a consistent basis, the firm said in its research report. The last time the number of transactions was this high, Ark said, Bitcoin's price was more than $50,000.
Another statistic Ark analysts cited was the number of long-term holders. Ark defines a long-term holder as an address that had a supply last active more than one year ago. In March, Ark says, that figure hit an all-time high with nearly 70% of all Bitcoins in circulation not moving.
In Ark's opinion, this strong holding behavior suggests not only that Bitcoin investors are resilient, but that they are growing more optimistic that its price will be higher in the future. This could be seen as a sign that the value of owning Bitcoin is more alluring as investors anticipate that it will serve an increasingly prominent role.
Simply put, March was a great month for Bitcoin. But Wood and her team at Ark Invest think the world's most valuable cryptocurrency might have more gains in store. In addition to the number of transactions and long-term holder supply, various other metrics suggest Bitcoin's network is in relatively healthy shape and might have turned the corner on the most recent crypto winter just in time for spring.
