QCP Capital report reveals smaller Treasury supply and dovish FOMC as key drivers of Bitcoin's surge
The recent surge in Bitcoin's value has been a hot topic in the financial world, with many attributing it to the anticipation of a spot Bitcoin ETF approval. However, according to a report by QCP Capital, the rally is primarily driven by macroeconomic factors rather than the ETF narrative.
QCP Capital's report suggests that the rally is due to a smaller than expected Treasury supply estimate and a dovish Federal Open Market Committee (FOMC), which sent bond yields tumbling and risk assets soaring. The dovish stance from the FOMC and the smaller than expected Treasury Q1 supply estimate have led to a drop in bond yields, influencing the Bitcoin price rally.
Bitcoin is currently behaving like a safe haven asset, following the example of gold. This behavior is attributed to weaker-than-expected U.S. payroll data and the Federal Reserve's rate pause. Investors view Bitcoin as a hedge against economic weaknesses, and the recent rate pause and less hawkish tone from the Federal Reserve support riskier assets.
The Bitcoin derivatives market suggests a market bracing for a significant move, with traders positioned for a potential upside breakout dependent on ETF approval. Fluctuations in the bond market are critical for the Bitcoin and crypto market as they affect investor risk sentiment.
Despite the primary influence of macroeconomic factors, some experts believe that the current rally is also influenced by anticipation of a potential spot ETF approval. Investors may follow a "buy the rumor, sell the fact" pattern, positioning themselves for further upside potential in the Bitcoin market.
While the approval of a spot Bitcoin ETF could indeed influence the market, QCP analysts remain bullish on Bitcoin, stating that only fresh regulatory pressure could push the price below $32,000. Thus, it seems that macroeconomic factors and investor sentiment play a more significant role in Bitcoin's price movements than previously thought.
