Bitcoin gains from China’s decision to cease economic stimulation, while risk assets have short term risks, according to analysis from QCP Capital. The trading firm shouldered near-term downside potential but forecasted a ‘capital reallocation’ to crypto markets after the China policy shift.
Bitcoin (BTC) lost recent gains in its latest bulletin, with Warnings geopolitical tensions and news of China’s stimulus pause hitting markets, according to QCP. U.S. futures and BTC briefly headed south of $62,000 before the U.S. stock market open on Tuesday, according to analyst Markets Pro and TradingView data.
Bitcoin Faces Macro Events
Given the impending macro events in the U.S., such as earnings reports and the next CPI release, QCP doesn’t think conditions will be so bad, in a few weeks. As the Chinese rally weakens, capital may flow into crypto, the firm said, viewing crypto as a maturing alternative risk on asset.
“However, we maintain a medium-term optimistic stance, expecting election headlines to continue driving crypto movement.”
This feeling fits with the overall enthusiasm about the crypto space, as some expect a great Bitcoin performance in October, which is known as the “Uptober.” Risk assets have been, and will continue to be, supported by global liquidity trends into the end of the year.
But equities could have headwinds, QCP warned, with high valuations and geopolitical tensions. At the same time, the U.S. dollar index (DXY) also rose, keeping pressure on crypto and U.S. stocks. DXY was at 102.37 at the time of writing, up 1.6% for the period.
While Bitcoin is surging, some traders doubt its rally. Popular trader Bluntz also suggested that crypto market gains in the early week might have been a trap. Bitcoin having a strong weekend didn’t mean that many don’t think it’s necessary to exercise caution in the short term.
