QCP Capital: Bitcoin poised for decline despite hopes of ETF approval

QCP Capital experts questioned the SEC to approve the spot Bitcoin-ETF application by year-end, leaving digital gold at the mercy of macroeconomic factors. The latest data point to downside risks.

QCP capital: We do not expect the SEC approval for any application or conversion to take place this year, which means the larger BTC trend below 25k or beyond 32k is beholden to macro winds for the rest of Q4.

QCP believed risks are firmly tilted to the downside from here for…

— Wu Blockchain (@WuBlockchain) October 18, 2023

Experts noted that the external backdrop is now the defining factor for Bitcoin exiting the $25,000-32,000 corridor. That environment favours sell-offs in both equities and bonds, portending a “serious catastrophe” in the form of a risk curve.

According to QCP Capital, the market is currently in a state of confusion. Will the forecast by BlackRock CEO Larry Fink that digital gold will behave like a precious metal and become a magnet for capital amid their flight to “quality”? Or will Bitcoin show itself as an asset with high beta risk?

If the first scenario proves correct, it would mark the start of a broad and multi-month bull phase.

Analysts attributed the bearish mood to consensus expectations of a “seasonal” rally in the stock market in Q4. They linked their skepticism to the end of the rate-hiking cycle.

Experts advised expecting a repeat of the October–December 2008, 2018, or even 2000 dynamics, rather than the 2007 and 2017 patterns that many currently anticipate.

We think the biggest trigger will be the exponential rise real rates in the US, when consensus again reaches an extreme, expecting them to fall

Experts drew attention to statements by President and US Treasury Secretary Joe Biden and Janet Yellen about the “ability” to sustain wars in Israel and Ukraine. This would increase the budget burden and, all else equal, trigger further rises in yields on the government debt market.

Analysts noted the markets’ underestimation of risks of escalation in the Middle East with possible U.S. involvement. A direct signal to selling stocks would be direct involvement of Iran in the conflict or, worse — American troops, they added.

Experts cited a Nasdaq chart showing a scenario of a “sharp breakout of the stock index within a bear-ending diagonal triangle,” which, in their view, would push Bitcoin out of its six-month consolidation.

Earlier, QCP Capital experts laid out four arguments in favour of a forecast that the price of the first cryptocurrency would return to $25,000.

Earlier, Galaxy Digital CEO Mike Novogratz predicted SEC approval of a Bitcoin ETF by the end of 2023.

According to CryptoQuant analysts, if the product is registered, the crypto market’s capitalization would surge by $1 trillion. They also forecast the price of digital gold rising to $50,000-73,000.