While the Bitcoin price has failed to sustainably advance into the $29,000 region since mid-March, several altcoins are currently experiencing a strong rally. Bitcoin dominance has risen to as high as 46.5% in recent weeks, but is currently seeing a small retracement.
Singapore-based crypto options trading firm QCP Capital says in an analysis today that both Bitcoin and Ethereum are entering a difficult time for monetization as both are wedged in a very tight range. Altcoins could benefit from this in the second quarter:
Perhaps Q2 is indeed shaping up to be the quarter of #Alts and #Airdrops, while BTC takes a breather. Pricing has essentially gone nowhere since March 17, when BTC closed at $27.5k and ETH at $1.8k.
Recession Gets More Likely, Bitcoin and Altcoins in Uncharted Territory
According to the company, this is largely due to the tremendous resistance that Bitcoin and Ethereum are facing. Even the major events of the past few days have not been able to get Bitcoin out of its tight trading range. Neither the FOMC meeting on March 22 with the 25 basis point hike nor the CTFC’s lawsuit against Binance were able to change that.
According to QCP, the markets have largely dismissed civil lawsuits because they are likely to have the same outcome as the BitMEX lawsuit in 2020. “We tend to agree. It is likely to go the same way as a suit against Bitmex a few years back where a large settlement was reached to conclude the affair,” the analysts wrote.
That’s why they saw it as a buying opportunity; but “now on the first sign of a recessionary turn in US data last night,” the firm warned to pay attention to the recession narrative, which will be formed with the macro data coming up this week.
Both the US dollar and bond yields turned sharply lower yesterday following the release of the ISM manufacturing index, which showed the sharpest decline since April 2020 amid the pandemic. And the recession outlook is likely to cloud further in the coming days, according to QCP:
We expect more weak US data to come out this week, further cementing the recession narrative. After many false dawns, we believe this will indeed be the lasting one.
Since both Bitcoin and cryptocurrencies in general have never been in a recessionary environment, the asset class should be classified as “unproven”, according to QCP Capital, which is even more true for a stagflationary environment.
However, should the Federal Reserve act quickly in a recession, as it did during the banking crisis last month, QCP expects Bitcoin to soar and lead the crypto market once again. But the risk of major headwinds is high according to QCP Capital – for both Bitcoin and Altcoins:
Price-wise all the easy work is now done, and we have gotten to the hard work zone for bulls. Firstly, Q2 tends to be a difficult quarter for risk markets, crypto notwithstanding.
At press time, the bitcoin price was at $28,329 and has fully recovered from the FUD crash over an Interpol Red Notice for Binance CEO Changpeng Zhao.
Featured image from iStock, chart from TradingView.com