The Impact of Macroeconomic Forces on Bitcoin Reaching $35,000

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• QCP Capital has stated that the recent crypto rally is primarily influenced by macroeconomic factors, unlike previous increases that were associated with spot ETF developments.
• As the spot price of Bitcoin continues to rise, derivative indicators like perpetual funding rates, futures contracts, implied volatility, and risk reversals remain at high levels.
• Fidelity’s Head of Macro, Jurrien Timmer, presents an interesting chart comparing Bitcoin’s volatility with other asset classes over the past three years.

Bitcoin has reached a significant milestone by surpassing $35,000 in price, and the main driver of this increase might not be ETFs!

Factors Other Than ETFs Driving Bitcoin!

QCP Capital argues that the real driver behind Bitcoin breaking $35,000 last month is macroeconomic factors, contrary to the crypto community’s celebration and hopes for the approval of a spot Bitcoin ETF.

QCP Capital suggests that this rally is mainly driven by macroeconomic factors, in contrast to previous rallies that were associated with spot ETF developments. This change was triggered by lower-than-expected Treasury supply estimates in the first quarter and low bond yields due to the dovish stance of the Federal Open Market Committee (FOMC), coupled with the simultaneous rise of risk assets.

While this rally is significant, the potential to initiate a sustained increase in equities and bonds worldwide remains uncertain since the broader macroeconomic landscape hasn’t fundamentally changed beyond fixing overly bearish bond sensitivities.

As the spot price of Bitcoin rises, derivative indicators like perpetual funding rates, futures contracts, implied volatility, and risk reversals remain at high levels. Traders awaiting a derivative-backed rally are eagerly anticipating the approval of a spot ETF, which could serve as a catalyst for further gains.

Upcoming events, such as earnings reports from Coinbase and Apple, as well as the release of non-farm payrolls (NFP) data in the coming days, could provide the necessary impetus to realize expected implied volatility and particularly high call option premiums.

However, QCP Capital emphasizes the importance of being aware of the excitement surrounding the approval of a spot ETF and adds that significant regulatory steps guided by SEC Chairman Gary Gensler may be necessary to push the market below the $32,000 support level at this stage.

BTC Volatility

Fidelity’s Head of Macro, Jurrien Timmer, presents an interesting chart comparing Bitcoin’s volatility with other asset classes over the past three years. Bitcoin is often criticized for its high volatility, which, while leading to significant losses, also results in substantial gains.

Bitcoin experienced a 54% drop from its two-year high but saw an 84% increase from its low point. When considering this risk-return ratio, Bitcoin is currently outperforming government bonds and many other asset classes. For a comparison, take a look at gold; it has only fallen 1% from its two-year high but has risen 22% from its low point.