QCP analysts, known for their market insights, have commented on the current volatile state of Bitcoin (BTC), which recently experienced a significant price recovery after a $700 drop. They have made new predictions for the year, following unexpected market performance in the previous quarter, possibly underestimating the impact of ETF approvals.
The analysts anticipate the launch of a BTC Spot ETF, which could happen anytime from now until next week, following heightened futures and funding rates for both BTC and ETH. These rates have surged since the fourth quarter of 2023, with some exchanges like Deribit seeing annualized perpetual swap funding rates exceed 100%, and a 30% increase in the 1-month spread—levels briefly seen when BTC was at $69,000.
Funding rates have normalized after a leverage flush on January 3rd, triggered by reports suggesting the SEC would not approve an ETF without a comprehensive Surveillance Sharing Agreement (SSA). This resulted in a price drop from $45.5k to $40.8k and $591 million in liquidations. Current resistance is at $46,000-$48,500, with support at $40,500-$42,000, but BTC has climbed back up to $44,000 despite the leverage washout.
Analysts note that the clearing of leveraged positions is crucial for further price increases, and spot volumes need to return to previous levels. Even as the report was written, a volatile event caused the closure of $270 million in positions, which could be positive for the medium and long term. The resilient price movement suggests a potential bullish narrative for BTC, supported by its halving story, expected around March/April this year.
Crypto prices continue to diverge from traditional financial (TradFi) markets due to the bullish ETF narrative. Interest markets are pricing in six cuts for 2024 despite the Fed’s dot plot suggesting three, indicating a significant macro risk if this aggressive pricing unwinds. If a Spot BTC ETF is approved, attention may quickly shift to an ETH spot ETF, with ETHBTC showing strong support at the 0.051 level. Experts suggest that 2024 could be a significant year for ETH.