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Tuesday, May 28, 2024

Bitcoin (BTC) Price Recovers But Danger Still Looms: QCP Capital

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Bitcoin’s setback below $61,000 triggered a market-wide correction. Despite the inflow of fresh capital, the leading crypto asset registered 15% in weekly losses at one point after hitting new all-time highs earlier this month.

QCP Capital’s analysis suggests that the Bitcoin bull market is far from over while simultaneously highlighting a continued liquidity rotation, which is likely to propel the asset to new highs post-halving. Having said that, a “violent” near-term correction due to lingering leverage might transpire.

Bitcoin’s Bullish Momentum at Risk?

One of the main catalysts of the Bitcoin rally this year and the subsequent improvement in investor confidence is the spot Bitcoin ETF inflows, which peaked on March 12 at a whopping $1.045 million. However, the net inflows appear to have dwindled, mirroring a decline in spot prices.

QCP Capital’s latest update revealed a notable net outflow of $326.2 million overnight, which represented the largest single-day outflow recorded. This prompted a knee-jerk reaction from Bitcoin, plunging to lows of 60,770 before rebounding above 63,000. The asset further surged to over $68,000 even though the outflows persisted.

The Singapore-based digital asset trading platform, though, said that the “bull market is NOT over.”

“We are in the middle of a broad liquidity rotation that will likely take BTC to new highs post-halving. However, the near-term correction could be violent given the amount of leverage that remains.”

Evaluating Fed’s Policy Shifts

QCP Capital said that the current market trend may signify a pre-FOMC position adjustment before Bitcoin potentially resumes its upward trend. Notably, the Federal Reserve had previously indicated three anticipated rate reductions for the year. Market sentiment aligns with this projection, anticipating the initial cut in June.

However, continued inflationary pressures, particularly in energy, housing, and supply-side expenses, may compel the Fed to reconsider its stance, potentially reducing the expected cuts from three to two. Such a hawkish shift in policy could exert downward pressure on Bitcoin spot prices.

Despite speculations of a deeper correction, popular crypto analyst Willy Woo said that Bitcoin will rebound soon. Expressing confidence in Bitcoin’s price, Woo added the recent pullback was merely a halt in the asset’s journey to a new peak.

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