UAEbased QCP Capital recently analyzed the price of Bitcoin stating that it has witnessed an unbelievable and swift recovery, comparing it with the increasing sideline of ETH ( Ethereum).
QCP, an institutional digital assets company received In-Principle Approval from the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) to conduct regulated activities in May 2024. According to QCP, the decision to make a move into this strategic market for the company’s footprint was in anticipation that the Middle East is going to become a dominant global hub for capital flowing into traditional and digital assets.
According to their market insights report published on August 10th , BTC ( Bitcoin) price is almost exactly where we started a week ago, hovering above 60k. It noted, “Truly an unbelievable and swift recovery, after getting hammered to 49k lows on Monday which was the worst single-day drawdown we’ve seen in years.”
The added that there were two major observations, the first is that there has been a fundamental shift in the liquidity profile of ETH relative to BTC. As per their analysis, while BTC is becoming increasingly integrated into the mainstream macro capital markets, ETH is becoming increasingly sidelined. This development likely stems from the distinct lack of interest in the ETH spot ETFs relative to the BTC spot ETF.
They believe that BTC as digital gold is a compelling narrative to investors while ETH is lacking one. This liquidity shift was made painfully obvious on Monday when ETH plummeted 22% compared to BTC’s 16%.
Yet they state that this is not necessarily negative for ETH price, because while Bitcoin has a propensity for exponential price gains, it also has a potential for larger drawdowns. They note in the report, “Before the ETH spot ETF, the difference in implied volatility between BTC and ETH was closer to 5%. Right now, it has expanded towards 20% and could be even higher. Perhaps the strategy here is to sell BTC volatility and buy ETH volatility.”
In terms of the second observation, they believe the Bitcoin is bullish. They attribute this analysis to the fact that despite what they call the crazy volatility, there was consistent demand for BTC calls expiring in 2025 with strikes close to 100K.
According to their analysis, the crypto market, is back on track towards a bullish year end.
