Cryptocurrency analytics firm QCP Capital has published an assessment of the recent decline in the crypto market, attributing the decline to a combination of geopolitical events and market liquidations.
The decline followed news of a second assassination attempt on former US President Donald Trump, which sent shockwaves through financial markets. That incident, combined with the liquidation of about $70 million worth of long positions during low-liquidity trading hours before Asian markets opened, deepened losses, according to the analyst firm.
The crypto market struggled over the weekend, failing to break above the $61,000 mark for Bitcoin, according to QCP. The attempted assassination of Trump was the catalyst for a sharper drop in prices, exacerbated by liquidations in a thinly traded market that made the market more vulnerable to sudden swings.
Despite the bearish sentiment, however, QCP noted that Bitcoin showed resilience the last time a major geopolitical event involving Trump occurred. Following Trump’s first assassination attempt on July 13, Bitcoin surged 13.8%, rising from $58,000 to $66,000 in the same week. This has led to speculation as to whether a similar recovery could occur in the coming days.
According to the analytics firm, this week looks set to be particularly eventful for crypto markets. The FOMC meeting on Wednesday, September 18, is expected to be a critical moment as the market awaits the first Fed rate cut of this cycle. Uncertainty remains over whether the cut will be 25 basis points or 50 basis points, with market sentiment shifting toward the latter. The probability of a 50 basis point cut has risen to 59%, up from just 30% last week, reflecting increased market volatility and anxiety.
Additionally, the Token2049 conference, which brings together key players in the crypto space, is ongoing. According to QCP, this event, combined with the FOMC decision, adds to the volatility potential of the market.
QCP also noted a sharp increase in volatility across major cryptocurrencies. On Friday, implied volatility for Bitcoin rose by 8 points, while Ethereum’s volatility rose by 20 points, signaling heightened uncertainty and the potential for large price swings. As macroeconomic factors weigh heavily on markets, any unexpected data could exacerbate these trends, analysts said.
*This is not investment advice.
