The latest analysis from QCP Capital indicates that Bitcoin recovered to $95,200 last night after successfully testing the key support level of $92,500. However, with the news of the US government’s plans to sell seized Silk Road Bitcoins, the outlook for Bitcoin turned bearish in the morning Asian trading session.
Cryptocurrency prices continue to be affected by macroeconomic headwinds. Minutes from yesterday’s Federal Reserve meeting showed a more dovish stance. The Fed said it would slow the pace of interest rate cuts due to rising inflation risks. Yesterday’s ADP employment survey also added to macroeconomic uncertainty, showing a slowdown in private sector hiring and wage growth. This contrasts sharply with Tuesday’s JOLTS jobs data, which showed a strong labor market.
In terms of options markets, all term curves are steepening; 3-6 month spreads have widened by 1.5 volatility points, while 6-12 month spreads have risen above one volatility point. Trading desks continue to watch for pressure on short-term volatility; at-the-money options expiring on January 17 have fallen by three volatility points compared to last night.
QCP expects Bitcoin to consolidate in the $92,000-$95,000 range during today’s US holiday market. If it falls below $92,000, it may further explore the $90,000 level.