According to QCP Capital, Bitcoin (BTC) hit new highs and slightly reduced crypto market volatility.
This relative stability is due to extensive profit-taking on long calls, a form of call option that bets on the price of BTC to rise. QCP Capital stressed that the presence of long calls allowed traders to lock in profits as the asset rose, which reduced volatility.
As BTC broke through key resistance levels and exited a long trading range, QCP analysts described the market sentiment as “euphoric.” They therefore advised caution, citing a significant increase in perpetual funding rates and benchmark yields.
Perpetual funding is the cost traders pay to hold long or short positions in futures contracts, and elevated perpetual funding can indicate that the market is overheating.
Current benchmark yields have hit a seven-month high, which QCP researchers say signals potential overleveraging. Statistically, such benchmark yield spikes tend to be short-lived and are often followed by corrective moves due to “deleveraging.”
These washouts occur during a period when traders holding leveraged positions are forced to sell or close their positions, creating downward pressure on prices. QCP's Bitcoin outlook remains structurally bullish, with the caveat that the market could see sharp declines.
In the near future, QCP analysts expect a phase of BTC consolidation around current levels until positive macroeconomic events. In particular, in December, the Federal Reserve may cut the interest rate by 25 basis points.
Meanwhile, Microstrategy, chaired by Michael Saylor, has acquired an additional 27200 BTC worth $2 billion. Note that the accumulation of bitcoins occurs regardless of the exchange rate fluctuations.
