BITCOIN RECOVERS, YET FACES POTENTIAL RISKS: QCP CAPITAL 

Bitcoin could face a steep downturn due to the substantial leverage still present in the market.

Following a dip below $61,000, Bitcoin led a significant market adjustment. Even with new capital entering the market, the premier cryptocurrency experienced a 15% decrease in its weekly valuation, having previously reached record highs this month.

According to QCP Capital, the Bitcoin market’s bullish phase isn’t concluding anytime soon. However, they also stress the presence of a persistent liquidity shift that could drive the cryptocurrency to unprecedented levels post-halving, though a severe short-term downturn is possible because of the existing leverage.

Is Bitcoin’s Upward Trajectory in Jeopardy?

The recent Bitcoin surge and a boost in investor optimism have been significantly influenced by the influx into spot Bitcoin ETFs, peaking on March 12 with an impressive $1.045 million. Nonetheless, recent trends show a reduction in these inflows, correlating with a decrease in spot prices.

QCP Capital recently observed a significant net withdrawal of $326.2 million in one night, marking the highest recorded single-day withdrawal. This resulted in a sharp decrease in Bitcoin’s value, dropping to $60,770, before it recovered to above $63,000 and later ascended beyond $68,000, despite ongoing outflows.

However, the firm maintains, “the bull market is NOT over.”

“The ongoing liquidity shift is poised to push BTC to new heights after the halving. Yet, the imminent correction could be intense due to the substantial leverage still in effect.”

Anticipating Federal Reserve Policy Adjustments

QCP Capital suggests the current market dynamics could reflect adjustments in anticipation of the Federal Open Market Committee (FOMC) meeting, ahead of Bitcoin potentially continuing its rise. The Federal Reserve had previously hinted at three possible rate cuts within the year, with market sentiment expecting the first reduction in June.

Nevertheless, persistent inflationary pressures in sectors like energy, housing, and supply chain costs might force the Fed to alter its approach, possibly cutting the anticipated reductions to two. Such a conservative shift in policy might negatively impact Bitcoin’s spot prices.

While there’s speculation about a more significant correction, renowned crypto analyst Willy Woo remains optimistic about Bitcoin’s imminent recovery. Woo reassures that the recent downturn is just a brief pause in Bitcoin’s trajectory towards new highs.

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