The changes in global liquidity are obvious, and BTC may enter a consolidation phase. There is evidence that liquidity trends usually affect BTC price movements about 13 weeks in advance.
Hawkish tone of FOMC meeting may curb BTC's upward trend
Since the December 2024 FOMC meeting, inflows into BTC ETFs have leveled off, remaining at a record peak of $35.9 billion. However, as the Fed becomes increasingly hawkish, risk capital may hesitate to invest further in these ETFs until monetary policy becomes clearer. Although the market initially shrugged off the hawkish tone of the December FOMC meeting, analysis of BTC’s historical performance suggests that such hawkish rhetoric may limit BTC’s gains until the Fed signals a shift to a more dovish stance.
While many attribute the rise in BTC prices in 2024 to the launch of ETFs, it may be more closely related to changes in the Federal Reserve's policy. The rise in 2024 began at the end of January 2024 when Federal Reserve Chairman Powell adopted a more dovish stance. This aligns with the upward momentum of BTC, but at the March FOMC meeting, Powell's stance on when the Federal Reserve would begin to cut rates became less clear, and this uncertainty may have led to the consolidation over the following six months, making the next move heavily reliant on the Federal Reserve turning dovish in September.
Although Trump's policy stance has contributed to the rise of cryptocurrencies, the hawkish position of the Federal Reserve may limit the upside potential. Currently, the market's downside risk appears to be limited, but proactive risk management can help mitigate risks.
Low implied volatility offers an attractive opportunity to reasonably utilize options to maintain market exposure while managing risk.
Currently, with implied volatility at a low level, options provide an attractive opportunity. Call options are relatively inexpensive, allowing traders to capitalize on potential gains. Alternatively, traders can use put options to protect substantial BTC profits at a low cost. Given the current uncertain outlook, utilizing options is a prudent way for traders to manage risk while maintaining exposure to market volatility.
The views expressed above are sourced from Matrix on Target; contact us to obtain the complete Matrix on Target report.
Disclaimer: The market carries risks, and investments should be made with caution. This article does not constitute investment advice. Trading in digital assets can have significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided herein.
