The changes in global liquidity are evident, and BTC may enter a consolidation phase. There is evidence that liquidity trends typically influence BTC's price movements approximately 13 weeks in advance.
The hawkish tone of the FOMC meeting may suppress the upward trend of BTC.
Since the FOMC meeting in December 2024, inflows into BTC ETFs have stabilized, maintaining a record peak of $35.9 billion. However, as the Federal Reserve becomes increasingly hawkish, venture capital may hesitate to invest further in these ETFs until monetary policy becomes clearer. Although the market initially dismissed the hawkish tone of the December FOMC meeting, analysis of BTC's historical performance suggests that such hawkish rhetoric may limit BTC's rise until the Fed signals a shift towards 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 the Federal Reserve's policy changes. The rise in 2024 began with Fed Chair Powell adopting a more dovish tone at the end of January 2024. This coincided with the upward momentum of BTC, but in the March FOMC meeting, Powell's stance on when the Fed would start cutting rates became less clear, leading to uncertainty that may have resulted in a sideways consolidation over the next six months, making the next steps heavily reliant on the Fed's dovish shift in September.
Although Trump's policy stance has contributed to the rise of cryptocurrencies, the hawkish position of the Federal Reserve may limit the upward potential. Currently, the downside risks in the market appear to be limited, but proactively managing risks can help mitigate them.
With low implied volatility, effectively utilizing options can allow for maintaining market exposure while managing risks.
Currently, due to low implied volatility, options present an attractive opportunity. Call options are relatively cheap, allowing traders to capitalize on potential upward profits. 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 risks while maintaining exposure to market volatility.
The views expressed above are from Matrix on Target; contact us for the complete report from Matrix on Target.
Disclaimer: The market carries risks, and investments should be made with caution. This article does not constitute investment advice. Trading in digital assets may involve 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.
