Bitcoin surged past $95,000 during low-liquidity trading hours on Sunday after US President Donald Trump made a major announcement. The formation of a US Crypto Strategic Reserve, including Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA), set the market ablaze with speculation. Many traders viewed this as a defining moment, one that could solidify crypto’s place in the U.S. financial system, while others remained wary, questioning whether the rally could sustain itself beyond the immediate reaction. Among those skeptical is QCP Capital.
A Well-Timed Political Bitcoin Play?
The timing of Trump’s announcement is difficult to ignore. Throughout the past week, risk assets faced mounting pressure as global markets reacted negatively to a series of economic and geopolitical developments. Trump’s newly imposed tariffs rattled investor confidence, while shaky Ukraine-Russia peace talks created additional uncertainty. Stock market volatility intensified, weighing heavily on sentiment across the financial sector.
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Bitcoin broke below its multi-month range, showing signs of weakness before Trump’s announcement. The sudden announcement was a stark contrast to the downward trajectory risk assets had been following.
QCP Capital highlighted the political strategy behind the move: “For a president who thrives on being the market’s hero, last week’s risk asset performance performance was anything but inspiring. His slew of new tariffs and shakier than expected Ukraine-Russia peace talks rattled investor confidence. So, while the timing of the SBR was somewhat unexpected, the political calculus was clear — Trump needed a win before his approval ratings starts slipping, a metric he likely takes very personally.”
However, questions remain as to whether this move represents a genuine shift in policy toward long-term crypto adoption or simply a well-timed announcement aimed at stabilizing sentiment before further economic strain emerges. While Bitcoin’s rapid ascent over the weekend excited traders, QCP Capital remains unconvinced that this rally represents a meaningful breakout. The firm pointed to several key market signals that indicate Bitcoin is not yet out of the woods.
QCP Capital cautioned: “Are we back in the game? Not quite. BTC is still trading near the bottom of its multi-month range and frontend crypto vols are still relatively elevated with both majors still reflecting a Put Skew till end-March. The VIX is also elevated, signaling broader market unease in risk assets overall, particularly after the recent tariff escalations from the US administration.”
Lessons From The Past: The ‘Xi Candle’ Comparison
For seasoned traders, the weekend’s price action is reminiscent of a historical event in the crypto market—the infamous Xi Candle of 2019. Prominent crypto analyst Cold Blooded Shiller took to X to draw comparisons between the two events.
Reflecting on the Xi Candle, Cold Blooded Shiller recalled how Bitcoin had been in a prolonged downtrend, trading at fresh lows with market sentiment at rock bottom. Then, seemingly out of nowhere, Chinese President Xi Jinping announced that China should embrace blockchain technology. The result was a massive short squeeze, with Bitcoin skyrocketing by 40% in just two days. Traders at the time believed it marked the beginning of a new bullish era for crypto.
“Sentiment was very quick to adjust. You’ll be surprised (not) to hear that it didn’t take much back then to shape the whole mindset of Twitter into the positives and ability for the market to now have an infinite bid,” he wrote.
However, the euphoria was short-lived. Several weeks later, China backtracked on its pro-blockchain rhetoric, implementing fresh crackdowns on crypto exchanges and warning investors about the risks of digital assets. Bitcoin’s gains slowly eroded, with price action reversing over the following month and ultimately dipping below pre-announcement levels.
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“We did not immediately reverse the candle. It actually took many weeks to do that, which made it all the more painful for those trading it or those who had their bullish bias,” Cold Blooded Shiller recalled.
The similarities between the Xi Candle and Trump’s Crypto Reserve announcement are striking. Both events followed prolonged periods of market weakness, both saw a dramatic shift in sentiment almost overnight, and both created a new bullish narrative that was widely embraced by the market. The key question now is whether Trump’s announcement will lead to a sustained trend shift or if, like the Xi Candle, it will eventually fizzle out, leaving late buyers trapped at the top.
Key Events To Watch This Week
Bitcoin’s ability to maintain its gains or extend higher will likely depend on key macroeconomic and regulatory developments in the coming days.
On Wednesday, markets will receive the latest Purchasing Managers’ Index (PMI) data, a crucial economic indicator that could influence expectations for Federal Reserve policy. If PMI data shows signs of economic weakness, it could increase speculation about potential rate cuts, which may provide a tailwind for risk assets, including Bitcoin. However, stronger-than-expected data could reinforce the view that the Fed will maintain its restrictive policy stance, potentially pressuring crypto and equities alike.
Friday brings the release of the Non-Farm Payrolls (NFP) report, a key employment indicator that has historically influenced market sentiment. A strong jobs report could signal continued economic resilience, reducing the likelihood of near-term rate cuts, which could negatively impact Bitcoin. Conversely, a weaker-than-expected report could fuel risk-on sentiment, further supporting BTC’s momentum.
Also on Friday, the White House Crypto Summit is expected to provide critical insights into the future of the US Crypto Strategic Reserve. If tangible announcements emerge, BTC could rise further. However, if the event fails to deliver meaningful policy direction, the market could react negatively, leading to increased volatility.
As QCP Capital put it, “Just when we think Trump has exhausted his cards, he may still have more surprises up his sleeve. Will this be the push toward that elusive all-time high? We’ll be watching.”
At press time, BTC traded at $90,352.
Featured image created with DALL.E, chart from TradingView.com
The Bitcoin price has posted five consecutive red daily candles since it stopped just short of its all-time high at $73,620 last Tuesday. As a result, the BTC price has fallen by around 7%. This decline is evident on the weekly chart, which shows a major bearish weekly candle – a gravestone doji.
Chartered Market Technician (CMT) Aksel Kibar noted via X, “BTCUSD weekly candle can look similar to GOLD,” and explained that it indicates a reversal is on the horizon. However, he added, “It is not dependable as an individual candle. Best to combine it with a following weak candle as a confirmation of trend reversal. […] The market narrative is that the bulls attempt to push to new highs over the session but the bears push the price action to near the open by the session close.
Bitcoin To Hit $75,000 By End Of November?
Despite this, Singapore-based crypto trading firm QCP Capital remains bullish in its latest investor note, highlighting significant shifts in both political prediction markets and the BTC derivatives market.
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According to QCP Capital, the odds on the decentralized prediction market Polymarket have “moved closer to actual poll estimates,” with Vice President Kamala Harris and former President Donald Trump “locked in a tight race.” While Polymarket still favors Trump at 55%, this marks a decrease from 66% a week ago, indicating a narrowing margin that aligns more closely with mainstream polling data.
The firm also noted a cautious sentiment prevailing in the cryptocurrency market. The “sideways price action over the weekend” and a decrease in leveraged perpetual futures positioning—from $30 billion to $26 billion across exchanges—suggest that traders are adopting a wait-and-see approach. This pullback may be due to uncertainties surrounding macroeconomic factors or the upcoming election.
Despite the current market hesitancy, QCP Capital sees potential for significant upward movement in Bitcoin’s price. The firm questioned whether this is “the calm before a break from the multi-month range and push toward all-time highs.” Supporting this outlook, QCP observed an increase in topside positioning with substantial buying of end-November $75,000 call options since last Friday. This surge in call options at that strike price suggests that traders are positioning for a substantial rally by the end of November.
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Additionally, the firm highlighted increased activity in options tied to the election date. “Election-date options positions are also rising,” QCP noted, with Friday implied volatility exceeding 87%, even as realized volatility remains at 40%. The elevated implied volatility indicates that options traders are anticipating significant price swings around the election period.
Looking ahead, QCP Capital expects Bitcoin’s spot price to remain range-bound until the US election results provide more clarity. The firm stated that they “expect spot to chop around this range until we get more clarity on the election results this week,” adding that “a Trump win is likely to cause a knee-jerk reaction higher, and vice versa if Kamala wins.”
At press time, BTC traded at $68,852.
Featured image created with DALL.E, chart from TradingView.com
Regardless of both their maturity in the market, Bitcoin and Ethereum rivalry persists. According to recent insights from QCP Capital, a global digital asset trading firm and market maker, Ethereum appears to have now shown potential for larger price fluctuations compared to Bitcoin. QCP reveals that the volatility premium between these two major cryptocurrencies has seen a notable increase, with Ethereum leading in potential price swings.
ETH to see Larger Price Swings than BTC
Delving further into the insights shared, QCP Capital disclosed that it has observed Ethereum’s volatility premium over Bitcoin expanding to 8%, up from 4% just last week. This widening gap, according to QCP highlights a growing trend where Ethereum is expected to outpace Bitcoin in terms of price volatility. Particularly, the analysis suggests that Ethereum could offer more lucrative opportunities for those willing to capitalise on its market movements.
Related Reading: Ethereum’s Breakout Moment: Here’s Why ETH Could Skyrocket to $15,000 Soon
Furthermore, besides the impending surge in volatility, Ethereum’s market behaviour continues to diverge from that of Bitcoin, with its performance holding relatively steady even amid broader market shifts. Analysts from QCP Capital have pointed out that despite recent market uncertainties, including significant movements of Bitcoin by the US government, ETH has managed to sustain its market position more effectively than its counterpart.
The analysts noted:
ETH spot has performed relatively well compared to BTC following Trump’s speech, with ETHBTC gaining 5% since, despite its fourth consecutive day of spot ETF outflows. Why the strength in ETH? The market might be becoming immune to headline outflow figures due to the rotation from more expensive ETHE to the cheaper ETFs.
They note that if the current trend of outflows from instruments like the Grayscale Ethereum Trust begins to slow, and inflows into Ethereum ETFs pick up, “could ETH break significantly higher?”
Suggesting a trade idea, the QCP Capital analysts added:
While we maintain a range-trading outlook for BTC as re-iterated yesterday, we favor accumulating ETH at its current discount, as volatility has picked up slightly.
Ethereum and Bitcoin Market Performance
While both Ethereum and Bitcoin have seen a negative performance in price over the past week, there remains a notable difference when being specific. For instance, over the past week, Bitcoin has decline by 1.4% however, Ethereum on the other hand has plunged 4.2% over the same period.
Meanwhile, in the past 24 hours, Ethereum has seen an increase of 1.2% bringing its price to trade at $3,314 while Bitcoin still remains in the red down by 1.4% over the same period to trade at a price of $66,292, at the time of writing.
According to prominent crypto analyst Micheal Van De Poppe, the crucial level for ETH/BTC is 0.0515. If that price mark breaks, Van De Poppe predicts that then “it’s party time” as this would be the “strong first signs of the week.”
For the first time, since the launch of the #Ethereum ETF, price rallied back upwards during U.S. hours.
Crucial levels are 0.0515 BTC. If that breaks, it’s party time.
Strong first signs of the week. pic.twitter.com/DysOtKMQpJ
— Michaël van de Poppe (@CryptoMichNL) July 30, 2024
Featured image created with DALL-E, Chart from TradingView
]]>The price of Bitcoin has been on a tear over the past seven days, returning between the $61,000 and $67,000 zone where it spent most of the second quarter. This positive run of form comes despite the FUD (fear, uncertainty, and doubt) due to speculations about Mt. Gox’s customer repayment.
Interestingly, recent trading data have led QCP Capital, a prominent trading data, to suggest that Bitcoin might only be warming up for an even bigger price rally. According to the company’s analysts, the premier cryptocurrency looks primed for significant price growth ahead of the United States elections.
BTC Price To Reach $100,000 By Year End?
Unsurprisingly, the climb of the Bitcoin price from beneath $60,000 to as high as $67,000 in the past week has been one of the hottest topics of discussion amongst investors. Analysts at QCP Capital are amongst the latest set of experts to weigh in on the recent price action of the market leader.
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According to the QCP analysts, the resilient upward movement of the BTC price reflects how the market may have “shaken off” most of its concerns. As a result, the flagship cryptocurrency may be preparing to continue its bull run, having spent the better parts of the last quarter in consolidation.
The QCP analysts pointed out in the report that the perpetual funding rate is back to a neutral position, signaling a balanced sentiment amongst traders. For context, the funding rate refers to a periodic payment exchanged between buyers and sellers in perpetual futures contracts.
What’s more, QCP capital noted that the Bitcoin spot market could persist within the $61,000 – $67,000 range in the short term, especially with traders holding substantial long positions at the July 26 $67,000 strike. Ultimately, investors appear to be betting big on a price upswing ahead of the United States elections.
Additionally, there has been steady and significant institutional interest in December $100,000 calls. This suggests an increasing confidence in the potential of a year-end rally for Bitcoin, especially with the rising odds of a Donald Trump victory in the upcoming elections.
It is worth mentioning that the price of Bitcoin spiked following the assassination attempt on the former United States president. This price movement was linked to the increased odds of a win for Donald Trump, who has been a vocal supporter of the premier cryptocurrency in recent months.
Bitcoin Price At A Glance
As of this writing, the price of Bitcoin continues to hover around $66,660, reflecting an over 5% increase in the past day. According to CoinGecko data, BTC is up by more than 16% in the past week.
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Featured image from iStock, chart from TradingView
In a recent market analysis, QCP Capital has highlighted significant bullish momentum in the crypto market, particularly for Bitcoin (BTC) price. However, QCP Capital expects Ethereum (ETH) to grab the spotlight. In their report, they highlighted that Bitcoin Exchange-Traded Funds (ETFs) has experienced a robust 15-day inflow streak.
QCP Capital Prediction On Bitcoin & Ethereum
The Bitcoin ETFs witnessed an influx of $886.1 million on Tuesday, June 4. This marked the second-largest inflow since its inception. Moreover, this substantial inflow has been accompanied by notable activity in the options market.
Furthermore, QCP Capital observed considerable buying interest in Bitcoin call options expiring in June. Hence, this trend indicates strong bullish sentiment. Moreover, the Bitcoin price is positioning for a potential breakout above the all-time high of $74,000 this month.
The firm’s analysis suggests that market participants are gearing up for a decisive move, reflecting confidence in Bitcoin price’s continued upward trajectory. However, while Bitcoin has been at the forefront of this recent surge, Ethereum has been trailing behind.
Despite this lag, QCP Capital anticipates that ETH could soon catch up and possibly even outperform the Bitcoin price surge. The rally will particularly be witnessed when the Spot Ethereum ETF begins trading, stated QCP Capital. The firm posits that the introduction of an Ethereum ETF could trigger significant rotations of funds from Bitcoin to Ether, providing additional upward momentum for the latter.
Also Read: Bull Run: Can Crypto Market Reach $3 Trillion, With Bitcoin Price Above $71,000?
Advise On Capitalizing ETH Surge
QCP Capital has also proposed a strategic trade to capitalize on this expected Ethereum price rally. They recommend achieving high convexity exposure to an Ethereum price increase in the near term through Zero Cost ETH September Knock-In, Knock-Out (KIKO) options.
The trade structure involves a short put strike at $3,500 with a knock-in level at $3,000, and a long call strike at $4,000 with a knock-out level at $6,400. This setup offers a maximum payout of 219.55% per annum or $2,400 per Ethereum if the spot price expires just below $6,400.
However, the cost of this trade is zero, but there is a downside risk. If the spot price falls below $3,000 at expiry, the investor must buy ETH at $3,500. As of now, Ethereum price is hovering around $3,700, indicating a bullish outlook in line with QCP Capital’s analysis.
Also Read: Bitcoin At $72K Sets $1.5B Liquidation Cascade, Willy Woo Predicts What’s Next
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Crypto trading firm QCP Capital on Friday recommended buying Bitcoin and Ethereum, saying “If you are still a bullish believer, a consolidating market could be the best time to accumulate longs.”
Bitcoin and Ethereum prices are consolidating near $63,000 and $3,100 levels for a massive rally this year. Santiment reported that Bitcoin active wallets are rising quickly despite choppy prices.
Bitcoin and Ethereum Fall Raises Questions
Post-Bitcoin halving performance of Bitcoin (ETH) and Ethereum (ETH) prices raised questions of whether the market has lost faith or is this just a short pause in a longer-term bull run.
QCP Capital, a Singapore-based digital asset trading company, in a new trade idea on April 27 noted the volumes in Bitcoin and Ethereum options have compressed drastically. This week, heavy selling of BTC options has seen the vol curve collapse, with Bitcoin vols further compressing from 70% to 50%. The company added that if people are looking to buy BTC and ETH, then this consolidating market is the best time to accumulate longs.
Other the other side, the downside skew in Ethereum (ETH) risk reversals has also dropped further to -13%, said QCP Capital. This could be due to recent reports of SEC possibly denying or further delaying spot Ether ETF. According to people familiar with the matter, the SEC and its staff have shown no interest in the spot Ether ETF and its potential. Four people who participated said the discussions were one-sided.
Also Read: Shiba Inu or Dogecoin: Which Is Better & Likely to Outperform This Year
Hong Kong’s Spot Bitcoin and Ether ETF Going Live
Spot Bitcoin and Ether ETFs to begin trading in Hong Kong on April 30. QCP Capital says this is potentially a big positive catalyst next week as Hong Kong financial industry joins other financial markets such as the U.S. and Europe to invest in spot Bitcoin ETF.
Experts predict market reaction similar to the United States, which saw massive buying by institutional investors. Interest is growing in what could be a gateway for the inflow of Asian institutional capital, said QCP Capital.
QCP Capital suggests BTC Accumulator and ETH Accumulator strategies for options traders, which a weekly buying call at a discount of the spot prices of BTC and ETH.
BTC price fell over 2% in the last 24 hours, with the price currently trading under $63,000. Meanwhile, ETH price trades at $3,116, down more than 1% in the past 24 hours.
Also Read: Bitcoin ETF Records First All Net Outflow Of $83M Since Launch, Bitcoin Bottomed?
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
The ongoing crypto liquidations triggered by macroeconomic factors have led analysts and traders to pitch new techniques to weather the storm. A new market report from QCP Capital highlights the prevailing risky market sentiment due to recent outflows from crypto assets.
According to the release, nervousness on the part of traders could see a downside in Ethereum (ETH) risk reversal. Present values have lost 20% since the liquidation over the weekend with the asset’s price at $3,063. These bearish movements have sparked reduced sentiment plummeting ETH price from its previous highs.
QCP projects the market sentiment to remain with the Iran-Israel tensions which also plunged the stock market as investors withdrew funds from risky assets. US equities have also recorded weakness despite some factors.
“Perp funding for BTC is flattish with the back end of the curve holding steady at double-digit yields. Alt perp funding is generally negative as well which shows that a lot of the long leverage has been wiped out.”
QCP Suggests Discount Trading
With crypto liquidation plummeting the price of Bitcoin and Ethereum, QCP suggests picking bottoms carefully at a discount from the spot price.
“Given the prevailing nervousness, we suggest picking bottoms very defensively by buying BTC or ETH at a significant discount to the spot price. For example, a 12-week Accumulator to buy BTC at 55k (12% discount!).”
These market conditions led to crypto enthusiasts trending the catchphrase “buy the dip” across social media spaces. With the upcoming halving, several traders expect a reversal of present factors.
Crypto Liquidations to Continue?
While many expect a reversal of crypto prices, an analyst explained factors that could spark more corrections in Bitcoin price. The 30-day funding rate for Bitcoin remains high close to 2021 levels.
Also, the asset faces its greatest resistance with its all-time high. Retail inflow figures show reduced investors in the market amid its discount and premium levels.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
QCP Capital has shed light on the overnight macro trigger that led to a notable sell-off in all risk assets, Iran’s threat of retaliation against Israel. This geopolitical tension reverberated throughout the market, sparking a wave of uncertainty and prompting investors to offload their riskier assets. Furthermore, the downside skew in ETH risk reversal serves as an early warning sign, revealing the market’s sensitivity to crypto market anxiety. The sudden and steep drop in the values of BTC and ETH, coupled with altcoins selling off by as much as 20-30% overnight, underscores the severity of the market reaction.
Moreover, negative perpetual (perp) funding rates, soaring to over -40%, depict a market in distress. This deep plunge in perp funding rates, the most significant recorded this year, indicates a heightened level of fear and uncertainty among investors. Additionally, the forward curve now resting below 10% further accentuates the market’s bearish sentiment. Despite the impending BTC halving, which typically stirs anticipation and volatility in the market, BTC finds itself ensnared within a tightening range between $64,000 and $73,000, reflecting the prevailing unease among investors.
Trade Ideas and Recommendations
In light of the current market conditions, QCP Capital suggests considering Conditional Fixed Coupon Convertibles (CFCCs) as a strategic approach to navigating the uncertain terrain. For investors bullish on BTC, a call-side CFCC presents an attractive opportunity.
Offering a 60% p.a. coupon rate and with maturity set on March 31, this investment avenue provides specific strike and protection levels, catering to investors’ risk appetites. Conversely, investors opting to deploy USD can explore the put-side CFCC. With a compelling 66% p.a. coupon rate and similar maturity terms, this option offers a hedge against market volatility while ensuring attractive returns.
Also Read: Ripple CTO Spotlights US District Court’s Probe Into X Vs. Media Matters Lawsuit
Market Outlook and Closing Thoughts
As the market grapples with uncertainty stemming from macro triggers and heightened sensitivity to risk assets, traders are urged to exercise caution and explore hedging strategies such as CFCCs to manage risk effectively. While the BTC halving looms on the horizon, breaking out of the established range in the short term may prove challenging. However, this underscores the importance of employing prudent trading strategies and staying abreast of market developments.
QCP Capital’s analysis and trade recommendations offer valuable insights into navigating the current market landscape and effectively managing risk. By leveraging strategic approaches like CFCCs, investors can position themselves to weather market fluctuations and capitalize on potential opportunities for growth.
Also Read: Ethereum Whale Buys $121M ETH From Binance, Price Recovery Ahead?
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Bitcoin inflows recorded in recent weeks have spurred analysts to project wider market gains on the heels of upcoming events.
Based on recent inflows to the leading cryptocurrency, a new market update from crypto trading firm QCP Capital predicts larger market activity post-halving. According to the analysis, the firm hinted the markets are at the center of a broader liquidity rotation likely to bolster Bitcoin to new highs after the upcoming halving event.
Bitcoin Liquidity To Usher Inflows
The liquidity rotation can be linked to Bitcoin price trading sideways over the last week with the market posting corrections in cryptocurrencies and decentralized finance (DeFi).
Analysts QCP Capital say the market is still within the bull cycle despite recent liquidations from taking the Bitcoin price to $63,869. Bitcoin which surged to an all-time high of $73,750 last week has plunged 13.3% to present levels.
Some crypto commentators view a slowdown amid weekly inflows in investment products marking broader liquidity to bolster Bitcoin price. Last month, Mathew Sigel, the head of digital research at VanEck noted the increased liquidity around the United States market with bulls taking advantage of the present opportunity.
The present market outlook sparked off by liquidity is due to the approval of spot Bitcoin ETFs by the United States Securities and Exchange Commission (SEC) on Jan 10. Last week $2.8 billion was recorded in Bitcoin institutional products.
QCP Warns Investors of Daily Correction
Despite the bullish forecast, QCP Capital warns of near-term corrections impacting price before the halving suggesting ways to wiggle through the tide. Bitcoin halving is notable for its bullish momentum in the top crypto price as the scarcity aids a wider uptick.
Historically, the event that takes place every four years has led to price gains spurring traders and miners to double down on their positions. Some miners however transferred their Bitcoin reserves to exchanges as a hedge for improved capacity.
The upcoming Federal Open Market Committee (FOMC) meeting could cause a swing in the asset’s spot price as macroeconomic indicators play a role in institutional investments. Per the release, a signal of two interest rate cuts instead of three might trigger a bearish movement.
“However, inflation has been sticky, and energy, housing, and supply-side costs have risen in the past few months. This could cause the Fed to hold back on cuts and today’s dot plots might show a change in signal to two cuts instead of three. If this hawkish surprise happens it would be bearish for BTC spot price.”
Read Also: Citigroup Boosts NVDA Price Target To $1,030 Amid GTC Hype
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
In their latest market update, QCP Capital, a crypto asset trading firm headquartered in Singapore, has dissected the recent Bitcoin price movements, attributing the rally to macroeconomic factors rather than the much-anticipated approval of a spot ETF. To recall, the Bitcoin surged from $34,500 to almost $36,000 on Wednesday.
The Main Reason For The Bitcoin Price Rally
The firm’s technical analysis highlighted that Bitcoin reached the 38.2% Fibonacci retracement level at $35,912 and touched the upper channel trendline before retreating, a move that was keenly observed by market participants.
QCP Capital’s report states, “This latest rally, however, was less about spot ETF developments and more about macro forces.” These macro forces were identified following a dovish stance from the Federal Open Market Committee (FOMC) and a smaller than expected Treasury Q1 supply estimate, which led to a significant drop in bond yields. This, in turn, has had a bullish effect on risk assets, including Bitcoin and the broader crypto market.
However, the firm also had a word of caution, saying, “Whether this marks the start of a new global equity and bond uptrend remains to be seen, as the macro picture essentially remains unchanged, outside a correction of overly bearish bond sentiment.”
The firm also noted the Bitcoin derivatives market, where “perp funding, and term forwards, implied volatility and risk reversals across the curve continue to remain or extend further at extreme elevated levels.” This suggests a market bracing for a significant move, with derivative traders positioned for a potential upside breakout that hinges on the approval of a spot ETF.
Looking at the broader financial landscape, the bond market has been experiencing notable fluctuations. Recently, the 30-year Treasury yield has reached another 16-year high, climbing above 5%. This level of yield has not been seen since 2007, and it represents a rise of over 4 percentage points in just three years. Such movements in the bond market are critical for the Bitcoin and crypto market as they affect the risk sentiment among investors.
However, Bitcoin is currently following the example of gold as a safe haven asset. ”The market is starting to price in the Fed’s overtightening and weakening economics. Combined with geopolitical tensions + war, the need for QE in the future is increasing rapidly. This is causing insurance assets (Gold, Bitcoin) to absolutely rip in unison,” Carpriole Investment’s Charles Edwards remarked recently.
In summary, QCP Capital’s insights into Bitcoin market dynamics versus current bond market trends suggest that while the Bitcoin market is influenced by a variety of factors, including speculation about exchange-traded fund approval, macroeconomic indicators such as bond yields play a larger role in determining market sentiment and price action than other pundits believe.
At press time, Bitcoin was trading at $34,235 and at risk of breaking out of the established uptrend channel to the downside. If that happens, low price levels could come next.
Featured image from iStock, chart from TradingView.com
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