In its last market update, QCP Capital, a Singapore-based crypto asset trading firm, has analyzed bitcoin‘s recent price movements, attributing the rally to macroeconomic factors rather than the long-awaited approval of a spot ETF. To recall, bitcoin rose from $34,500 to almost $36,000 on Wednesday.
The main reason for the bitcoin price rally
The company’s technical analysis highlighted that bitcoin reached the 38.2% Fibonacci retracement level at $35,912 and touched the upper channel trend line before pulling back, a move that was closely watched by market participants.
The QCP Capital report states: “However, this latest rally was due less to the performance of spot ETFs and more to macro forces.” These macroeconomic forces were identified following a dovish stance from the Federal Open Market Committee (FOMC) and a lower-than-expected Treasury supply estimate in the first quarter, leading 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 warned: “Whether this marks the beginning of a new global equity and bond bullish trend remains to be seen, as the macro picture essentially remains unchanged barring a correction to the excessively bearish bond sentiment.” “.
The firm also highlighted the bitcoin derivatives market, where “criminal funding and forward contracts, implied volatility, and risk reversals across the curve continue to hold or further extend at extremely elevated levels.” This suggests the market is bracing for a significant move, with derivatives traders positioned for a potential breakout dependent on the approval of a spot ETF.
Looking at the broader financial picture, the bond market has been experiencing notable fluctuations. Recently, the 30-year Treasury yield hit another 16-year high, topping 5%. This level of performance has not been seen since 2007 and represents an increase of more than 4 percentage points in just three years. These movements in the bond market are critical for the bitcoin and cryptocurrency market as they affect risk sentiment among investors.
However, bitcoin is currently following gold’s lead as a safe haven asset. ”The market is starting to price in the Federal Reserve’s overtightening and weakening of the economy. Combined with geopolitical tensions and war, the need for QE in the future is increasing rapidly. This is causing insurance assets (gold, bitcoin) to break down absolutely in unison,” Charles Edwards of Carpriole Investment. commented 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 over the approval of exchange-traded funds In the stock market, macroeconomic indicators such as bond yields play a larger role in determining market sentiment and price action than other experts believe.
At the time of this publication, bitcoin was trading at $34,235 and was at risk of breaking out of the established bullish trend channel to the downside. If that happens, low price levels could be next.
Featured image from iStock, chart from TradingView.com
