Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesCopyBotsEarn
Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors?

Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors?

BlockBeats-Article2024/04/11 02:36
By:BlockBeats-Article
Original title: Blofin Whales' View: War, Gold and Crypto
Original source: Blofin
Original translation: Lila, BlockBeats


The increase in global uncertainty is one of the main reasons for the continued improvement in the liquidity level of the crypto market in recent times, and it is also an important reason for the strong performance of Bitcoin in recent times.


Due to the lack of safe-haven properties, the performance of altcoins depends more on the changes in macro liquidity and the game status of funds on the market.


Compared with ETH, altcoins have gained some advantages in the liquidity competition, which has further adversely affected the performance of ETH.


Bull market in geopolitical crisis


After the release of the US non-farm payrolls data last week, the "lower-than-expected interest rate cut" seems to have been gradually accepted and digested by investors.


This week, central banks, led by the European Central Bank, will also announce their latest interest rate decisions. Although Europe has performed much better than the United States in terms of inflation, and the ECB has higher expectations for rate cuts, given the ECB's weaker influence relative to the Federal Reserve, it is certain that the speed at which global cash liquidity returns to risky asset markets will slow down in the future. For the cryptocurrency market, the bull market may be more "mild and lasting."


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 0

Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 1


However, the reality does not seem to be the case. Since the beginning of April, the return rate of cash liquidity within the cryptocurrency market has significantly accelerated. In the past week, the entire cryptocurrency market has received nearly $3 billion in cash liquidity, and the overall cash liquidity scale has also returned to the same period in the third quarter of 2022. Affected by this situation, the prices of BTC, ETH and other altcoins have received strong support, and market sentiment has also recovered significantly. What caused the abnormal changes in cash liquidity?


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 2


Let's take a look at the performance of other assets. While Bitcoin hit a new all-time high, gold prices rose by more than 25% in 6 months, also breaking through all-time highs. At the same time, the prices of silver and copper are also close to their highest points in nearly a year. Rising gold prices are usually associated with risk aversion. As a long-standing "hard currency", gold is an important hedge against rising macro uncertainties, especially in the context of geopolitical tensions.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 3


However, things get interesting when we look at the price trends of silver and copper. Silver and copper are important military and strategic materials that are closely related to weapons production and the defense industry. Therefore, to some extent, the rapid rise in silver and copper prices is also another reflection of the risks of geopolitical conflicts and macro uncertainties.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 4

Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 5


So, are there more clues like this? Of course there are! Since the beginning of 2024, crude oil prices have risen by more than 20%. The prices of important strategic materials such as coffee have also soared due to increased demand and tight supply chains caused by geopolitical crises.


Risk aversion is never reflected in just one asset; when uncertainty arises, people will exchange cash for "safe hard currency" or raw materials, which is an important reason for the rise in commodity prices such as gold, crude oil and coffee, and of course, one of the reasons for the rise in the prices of cryptocurrencies such as Bitcoin.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 6

Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 7

Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 8


BTC: Will it rise again?


Given the escalation of geopolitical tensions in the Middle East and Eastern Europe, the risk aversion demand of global investors is unlikely to be effectively alleviated in the short term. Therefore, risk aversion will strongly support the demand for BTC. At the same time, although the return of cash liquidity is expected to slow down, liquidity tightening is unlikely to occur again. Therefore, the scale of liquidity locked in the spot BTC ETF will remain relatively stable. In the long run, the return of future liquidity will also steadily push up BTC prices.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 9


Traders in the options market hold similar views. Although investors' bullish sentiment on the day has been weakened due to short-term fluctuations, investors' bullish sentiment on BTC remains stable and dominant in terms of prospects and prospects. However, compared to March, investors' expectations for BTC's medium- to long-term performance have slightly declined, and the weakening expectations of lower interest rates may be one of them.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 10

Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 11


Based on the latest Gamma exposure distribution, BTC prices seem to show some signs of stabilization as the "asset allocation cycle" ends. BTC prices may find some support around $63,000 to $65,000. However, if BTC prices rise further, it will encounter some resistance around $74,000, and the resistance will increase significantly as the price rises.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 12


It is worth noting that the latest implied volatility data shows that traders are still relatively cautious about BTC price performance. Faced with the upcoming BTC halving, despite the relatively low level of macro uncertainty and the reduced pricing of tail risk levels, traders still expect the 7-day price volatility range of BTC price to reach 9.27%, while the 30-day price volatility range may reach 20.74%.


Considering that investors' bullish sentiment is still high, in an ideal situation, BTC price may still break through $80,000. However, volatility is never one-way; we cannot ignore the possibility that BTC price may fall below $65,000.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 13


Traders' caution seems reasonable. In the spot market, although the number of whales holding more than 1,000 BTC is still increasing, the overall growth of the number of whales holding more than 100 BTC has stagnated, which means that purchasing power is weakening. Overall, although holding BTC is still a better choice in the medium and long term, the rise in BTC prices may gradually stabilize as the "asset allocation cycle" temporarily ends.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 14

Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 15


Non-BTC currencies: internal game


Compared with BTC, ETH is not so lucky. The probability of the spot ETH ETF passing is gradually becoming slim. Even the most optimistic ETH investors have gradually accepted that the negotiations and games around spot ETFs will be long-term. ETH's performance depends more on the reconfiguration of liquidity within the cryptocurrency market and changes in the macro liquidity level within the cryptocurrency market.


From a macro perspective, traders remain optimistic about ETH's long-term performance, benefiting from the expectation of interest rate cuts. However, similar to BTC, the weakening of interest rate cut expectations has also had a negative impact on ETH's future performance expectations, which is reflected in the change in the annualized premium of ETH futures.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 16

Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 17

Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 18


Although investors have priced in relatively high price changes in ETH prices (7-day 9.94%, 30-day 21.5%), from the perspective of the latest Gamma distribution, investors are more likely to worry about the volatility brought by price declines than the volatility brought by price increases. If the ETH price shows a downward trend, it can only get some support after falling to about $3,300.


Compared with the resistance of the upward range, the support on the downward path appears "insignificant". Unless there are enough positive events in the current market operation mode based on "liquidity reallocation", the hedging behavior of market makers will make it difficult for ETH prices to break through and stabilize above $3,700.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 19

Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 20


Fortunately, ETH whales seem to have slowed down the sale of spot. Under the influence of projects such as Ethena, staking for profit has become a relatively more profitable business, and traditional covered call strategies have also been favored again when price increases slow down. However, this only means that the whales remain "neutral" in the price game for the time being.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 21


For speculators, when ETH prices are weak, it seems more appropriate to invest in other currencies with greater potential, which further adversely affects ETH's performance. ETH's market share once fell below 16%; despite the recent recovery, ETH's market share has still shrunk significantly compared with last month. Considering that BTC's market share has not changed much in the past month, it is clear that altcoins have gained some advantages in the liquidity competition with ETH.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 22


In general, holding ETH is not a "bad strategy"; for whales, ETH's rich interest income channels can still bring relatively stable and considerable returns. However, for investors seeking breakthrough returns, it seems more appropriate to follow the pace of liquidity reconfiguration in the cryptocurrency market, given the current leverage level and the relatively low speculative sentiment reflected by altcoins.


Bull market in geopolitical crisis: Why is BTC still hesitant despite multiple positive factors? image 23


Original link


欢迎加入律动 BlockBeats 官方社群:

Telegram 订阅群: https://t.me/theblockbeats

Telegram 交流群: https://t.me/BlockBeats_App

Twitter 官方账号: https://twitter.com/BlockBeatsAsia

0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Locked for new tokens.
APR up to 10%. Always on, always get airdrop.
Lock now!

You may also like