2023-6-3 18:30 |
Bitcoin is recording minor profits on higher timeframes but has been unable to display significant price action. In this context, volatility is reaching a record low, but the status quo could suddenly shift in the short term.
As of this writing, Bitcoin trades at $27,100 with sideways movement in the last 24 hours. In the previous week, BTC recorded a 3% increase, while other assets in the top 10 by market capitalization show similar performance, with XRP and MATIC leading the small uptick.
The New And Old Status Quo, Bitcoin’s Path Towards New HighsPer a recent report from the trading desk of QCP Capital, the macroeconomic landscape has become clear as political actors in the U.S. reached a compromise on the Debt ceiling. The narrative around this event was triggering uncertainty in the financial sector.
Increased uncertainty contributed to the decline in volatility and the sideways movement across risk-on assets, including Bitcoin. In that sense, QCP Capital claims that BTC is following a trajectory similar to 2020 when uncertainty in the macro scene and the crypto market emerged from a long winter.
At that time, the cryptocurrency declined to a critical level and displayed sideways movement throughout the year. As seen in the chart below, Bitcoin has not only behaved as it did in 2020 but trended upwards later that year.
QCP Capital expects BTC to perform following this fractal, with a break in the sideways price action coming soon. The trading desk noted:
This consolidation has played out perfectly so far, but we expect that we are soon coming close to the end sometime this month. As a result, we recommend positioning for an upcoming big move through long 3m and 6m strangles here, with a bias to the long call side.
BTC To Vibe With The SeasonThe decline in volatility has led to a decrease in the price of BTC options. Therefore, QCP Capital believes building a BTC position with a long bias using these financial products could be fruitful.
As seen in the chart below, volatility for the 3 months at the money (ATM) options are moving with historical data. Before the summer and until late June, volatility trends lower before recording an explosive move.
This year, the move is to the upside, according to QCP:
Seasonality on the implied vol market over the past 4 years also argue for a sharp June rally before the summer lull (Chart 4). This is in line with macro market seasonalities as traders rush to adjust positions in June before their summer breaks.
Cover image from Unsplash, Chart from Tradingview
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