Bitcoin continued to trade sideways as the weekend approached, with the cryptocurrency hinting at potential losses as volumes dwindled on exchanges. The price of BTC has given back the gains of the past week but was able to hold the current level as key support.
At the time of writing, Bitcoin (BTC) is trading at $23,000, having traded sideways over the past 24 hours and is down 3% over the past week. Binance Coin (BNB) and Polkadot have far surpassed the first cryptocurrencies in market capitalization as risk appetite appears to be returning to the cryptocurrency market.
in the most recent Report, trading firm QCP Capital reiterated its stance: BTC’s price upside potential will remain limited after a bullish reaction to last week’s macroeconomic events. The firm expects bitcoin and ethereum to trade sideways in the coming weeks, with a possible brief rally.
The latter can translate into price action based on three bullish macroeconomic factors: Federal Reserve (Fed) signalling less aggressive monetary policy, inflation may have reached a short-term peak, reflected in falling prices in commodities, and potential upside in traditional markets .
QCP Capital believes that many market participants in the traditional financial sector are holding short positions and may expect more losses in the past earnings season. These positions are vulnerable to a “short squeeze,” a sudden upward move that could benefit Bitcoin and the crypto market. QCP Capital Say:
The immediate market reaction after the FOMC (Federal Open Market Committee, last Thursday) release was a price rally and heavy selling. BTC rose to a high of 24,666 and ETH rose to 1,793. In vols, the BTC front dropped below 70% (from close to 90%) and ETH to 90% (from 125%).
Can Bitcoin and Ethereum break through mid-term barriers?
With the potential for bullish momentum, the bears could re-attack if the Fed takes a more aggressive stance on its monetary policy. QCP Capital noted that there are “many” Fed members who disagree with current market expectations.
Market participants have been trying to get ahead of the Fed by pricing future rate hikes. Hence why some Fed members may want to become more hawkish and surprise the market with bigger rate hikes, reducing demand and potentially having a deeper impact on lowering inflation. QCP Capital says:
We continue to think the market will trade sideways and is sensitive to economic data releases. Next Wednesday’s US CPI will be the next important indicator to watch.
The trading firm believes that the upcoming ethereum “merger” is the biggest obstacle to future appreciation. This event may open the way for the emergence of ETH forked tokens.
If one of these tokens, proof-of-work (PoW)-based ETH, is able to retain the market share of proof-of-stake-based ETH, the token could experience a “significant price disruption or special dividend similar to a stock split.”