Cryptocurrency research firm Blofin Academy has recently published an analysis that voiced a cautiously bullish view on Bitcoin, even as macroeconomic signals and global market conditions keep investors cautious.
The report comes after Bitcoin’s recent price rally that has reignited optimism among crypto traders. However, the firm highlighted several factors that call for caution.
- Fed Rate Cut Outlook: The US Federal Reserve’s policy remains a focal point for investors. Following the September Consumer Price Index (CPI) report that beat expectations, the interest rate market is predicting that the Fed will cut rates by only 45 basis points (bps) for the rest of the year. The options market is also predicting that there could be only one more rate cut in 2023, a 25 basis point cut, followed by a pause in early 2024.
- Market Volatility: The latest CPI surprise added to uncertainty, and the MOVE index, a measure of volatility in Treasury yields, reached its highest level since June 2024. Volatility indices for other assets also rose, reflecting the heightened risk perception in global markets.
- US Stocks and Dollar: Despite these uncertainties, the US dollar (DXY) and stocks have remained resilient. However, Blofin noted that equity risk premiums have declined, suggesting that the reward for taking on equity risk is lower. This decline could signal increasing complacency and leave the market more vulnerable to future shocks.
- Crypto Market Uptrend and Analysis: Bitcoin (BTC) and Ethereum (ETH) have seen significant price gains recently. According to Blofin’s Gamma Exposure (GEX) analysis, there is currently no clear resistance level in the crypto market, suggesting that prices could continue to rise with few obstacles. However, the firm also warned about the fragility of the market, stating that the lack of structural support could lead to sharp declines if investor sentiment changes.
- Options Market Sentiment: In line with the crypto rally, the options skew has shifted to a more optimistic stance, although it remains in neutral territory. This move signals growing confidence among investors, but falls short of an overwhelmingly bullish outlook.
- Risk Concerns: Despite the recent rally, Blofin noted that risk pricing has been rising since late September, suggesting that investors remain cautious of extreme negative events. Uncertainty about future Fed rate cuts and broader macroeconomic conditions continues to weigh on sentiment, underscoring the market’s cautious stance.
*This is not investment advice.