As the macro narrative shifts from protectionism to trade optimism, BTC may maintain range-bound volatility
QCP Capital recently released a report analyzing the impact of the macro narrative's shift from protectionism to trade optimism on the cryptocurrency market, particularly the effects on Bitcoin (BTC) and Ethereum (ETH).
The Shift in the Macro Narrative
• Trade Optimism: The agreement between the U.S. and China to temporarily suspend some tariffs has driven the U.S. stock market up by 3%. Gold prices initially fell by nearly 3% before partially recovering.
• Cryptocurrency Market Reaction: After an initial drop, BTC and ETH stabilized at approximately $103,000 and $2,400, respectively. BTC's dominance fell below 63%, while altcoins like ETH performed well.
Market Performance of BTC
• Range-Bound Volatility: BTC continues to oscillate between its identity as “digital gold” and its role as a risk asset, creating uncertainty about its direction. As the macro narrative shifts from protectionism to trade optimism, BTC may maintain range-bound volatility.
• Long-Term Investment Perspective: A long-term investment perspective may support demand for backend options, reduce front-end put hedge demand, and lead to a steepening of the volatility curve.
Market Performance of ETH
• Clearer Trend: The trend for ETH is clearer, with funding remaining neutral and options leaning bearish, indicating that its breakout is not driven by speculation.
• Impact of Technical Upgrades: ETH's breakout above $2,400 coincides with the Pectra upgrade, and the reappearance of long-term options flow may suggest that ETH is becoming the next major allocation target in the market.
QCP Capital's analysis indicates that as the macro narrative shifts from protectionism to trade optimism, BTC may maintain range-bound volatility, while the trend for ETH is clearer, with technical upgrades and the reappearance of long-term options flow potentially indicating it will become the next major allocation target in the market.