QCP: Markets interpreted the tapering of the ‘quantitative tightening’ programme as an indirect signal to cut interest rates, with an eye on the US stock market to see if the opening rally can be sust
Last night's Federal Reserve FOMC meeting provided a long-awaited upside catalyst for the market, pushing the Bitcoin price above $85,000 in a short period of time, according to new analysis from QCP Capital on 20 March.
The key driver was the Fed's decision to taper its ‘quantitative tightening’ (QT) programme from April. The market interpreted this as an indirect signal to cut interest rates, reinforcing expectations that the Fed will begin easing monetary policy as early as June. At the time of writing, the market has priced in three rate cuts for 2025, expected in June, September and December.
In the options market, market positioning has normalised with the skew shifting back towards call options. This is in stark contrast to the bias towards puts earlier in the week, and QCP Capital points out that the key test will come when US markets open tonight: whether this rally can be sustained or whether investors will realise that the risks are still there.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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