Bitcoin continues its sideways movement as weekend nears. The cryptocurrency’s trading volume is decreasing on the exchange platforms and this could lead to potential losses. BTC’s price has surrendered the gains from the past week but has been able to hold to its current levels as critical support.
Bitcoin (BTC), which trades at $23,000, has seen sideways movements over the last 24 hours and a 3.3% drop over the week. Due to increased risk appetite, the market’s first cryptocurrency has seen its market cap significantly outperformed by Polkadot and Binance Coin.
A recent report, trading firm QCP Capital reiterates its position: BTC’s price upside potential will remain capped after a bullish response to last week’s macro-economic events. It expects Bitcoin to trend sideways in the next weeks, with possible short-lived rallies.
This could lead to price action, based upon three bullish macro-economic variables: The U.S. Federal Reserve has indicated that they will be adopting a more moderate monetary policy. Inflation may have reached its peak in the short term, as shown by the decline in commodities prices, and any upside potential in legacy markets.
QCP Capital thinks that traditional finance market participants took short positions and could have suffered more losses during past earnings seasons. These positions are susceptible to a “short squeeze”, a sudden move to the upside, which could benefit Bitcoin and the crypto market. QCP Capital said:
The immediate market response was price rallies and vol selloffs after the FOMC (Federal Open Market Committee) meeting on Thursday. BTC rallied up to 24,666 while ETH rose to 1,793. BTC’s frontend fell to 70% from close to 90%, and ETH dropped to 90% (from 125%).
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There is potential for bullish momentum. Bears might relaunch their attacks if Fed is more aggressive with its monetary policies. QCP Capital noted that there are “many” Fed members in disagreement with current market expectations.
Participants in the markets have tried to price in future Fed interest rate rises, hoping to catch up. Some Fed members may be more hawkish than others and shock the markets with higher interest rates, a lower demand, and perhaps a greater impact on inflation. QCP Capital stated:
Markets will continue to trade in a sideways fashion, and we believe that economic data will make markets more sensitive. Next Wednesday’s US CPI will be the most important.
The trading firm believes that the upcoming Ethereum “Merge” is the biggest hurdle for future appreciation. This might be the catalyst for the emergence ETH fork tokens.
If one of these tokens, the ETH based on Proof-of-Work (PoW), is able to retain market share from the ETH based on Proof-of-Stake, the token could see a “significant price disruption akin to a stock split or special dividend”.