The Cryptocurrency Market Shows Growth in Q4 2023
As the final quarter of 2023 begins, the cryptocurrency market is experiencing significant growth, particularly with Bitcoin (BTC). BTC has surged by 15% in the last two weeks and 9% in the past three days alone. This comes after a disappointing third quarter where BTC dipped by 12%, reaching a low of 26,500 at the end of the Supermoon cycle. However, despite this positive trend, QCP Capital, a crypto asset trading firm, remains skeptical about the sustainability of this rally.
The Reasons for Caution
In an article published by QCP Capital, they outline four primary reasons for their caution:
- Exogenous Factors Fueling the Rally: The recent surge in BTC prices can be attributed to external factors such as impending SEC approvals for Ethereum futures ETFs, lower-than-expected core PCE inflation figures, and a last-minute government resolution that avoids shutdown until November 17.
- The ETF Effect: QCP Capital draws parallels with the launch of BTC futures ETFs two years ago, noting that such events can create short-lived highs. They argue that futures ETFs can dilute the spot market without affecting actual supply.
- Government Shutdown Scenarios: While the current resolution may seem positive in the short term, QCP Capital suggests that a government shutdown might have been more favorable for the markets based on historical data.
- Influence of Real Yields and Gold: QCP Capital believes that real yields and gold are important indicators to watch. If the resolution triggers an upward movement in real yields, risk markets could face significant downside pressure.
In light of these factors, QCP Capital is using the current rally as an opportunity to purchase downside hedges. They anticipate resistance for BTC at the 29-30k level and suggest that the current low volatility presents a cost-effective option for preparing for any sharp downward reversals.
Hot Take: Q4 Rally or Short-Lived Highs?
The cryptocurrency market, particularly Bitcoin, has shown impressive growth in the final quarter of 2023. However, QCP Capital remains skeptical about the sustainability of this rally. They attribute the recent surge in BTC prices to external factors and draw parallels with previous events that resulted in short-lived highs. Additionally, they highlight the potential impact of a government shutdown and the influence of real yields and gold on risk markets. While some are optimistic about a Q4 rally, it is essential to consider these cautionary factors when assessing the current market trends.
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