Bitcoin Retraces To $43K, Why The Next Few Months Could Be Bullish
Bitcoin found short-term support near $43,000 as it retraces some of its gains from the current week. The first crypto by market cap is displaying more strength and managed to close February’s monthly candle in the green, something that last happened back in Q4, 2021.
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At the time of writing, Bitcoin trades at $43,985 with a 16.9% profit over the past week.
In a recent update from QCP Capital, the firm reiterated its bullish stand. As NewsBTC recently reported, the firm published a monthly report on the crypto market and made a deep dive into the factors impacting BTC’s price at the moment.
Of course, the Russia-Ukraine conflict is one of the most significant. QCP Capital explored the market performance after a conflict has started, comparing the current situation with the 2001 U.S. invasion of Afghanistan and the Crimea crisis of 2014.
On several occasions, when major arm conflicts erupt, the market reacts to the downside but sees some subsequent relief. QCP Capital wrote:
Historically, war-related sell-offs have been great buying opportunities, particularly large-scale war involving superpower. In the Vietnam war (1964) Gulf War (1991), Afghan War (2001), Iraq War (2003) and Crimean Crisis (2014), markets saw positive returns for 3-6 months after the invasion.
Conversely, QCP Capital expects other macro events to bring volatility to Bitcoin and the crypto market. The first will take place on March 10th, when the U.S. is set to publish its latest Consumer Price Index (CPI) print. QCP Capital added:
In the next few weeks, we expect volatility from significant macro events. US CPI on 10 March and the FOMC rate decision on 16 March will shift the market’s focus back on the Fed.
A Bullish Period For Bitcoin Before Bears Take Back Control?
A high CPI was bullish for BTC and cryptocurrencies in 2020 and for a good portion of the pandemic, but it became a bearish factor as the FED hinted at a shift in its monetary policy to stop inflation. Now, the market is uncertain about the FED’s reaction to the conflict, and its potential impact on inflation. QCP Capital said:
The market is keen to see how the Fed responds to war and the severe inflationary impact that has followed. Already Powell’s testimony earlier today in the House was noticeably more dovish and the probability of a 50 bps hike in March has been priced down.
Thus, potentially contributing to Bitcoin’s recent relief rally from the mid-levels at $30,000s, and why the bulls could remain in control for a couple of months. The market was expecting a more aggressive FED, and the next FOMC meeting could clear out a lot of the uncertainty surrounding BTC’s future performance.
A dovish FED could imply more gains for BTC’s price in the coming months. However, QCP Capital doesn’t rule out potential downside risks going into Q3 as market participants reduce risk to adjust to the monetary tightening.
The Russia-Ukraine conflict might have had unforeseen consequences, as it highlights the importance of cryptocurrencies as an alternative to the legacy financial system. In the coming years, Bitcoin and the crypto market, QCP Capital said, could support one of the most important wealth transfers in history.
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Thus, why any potential downside price action could be an opportunity for bullish investors. The firm added:
(…) this coming dip could be the best opportunity to build up a structural long position in crypto. The war has instigated a tectonic shift that we think will form the foundations of a multi-decade crypto bull run in time to come.