Pessimistic report: "Crypto bull cycle at a critical threshold"

Source: BTCHaber Original Title: Pessimistic report: “The bull cycle in crypto is at a critical threshold” Original Link: The digital asset consultancy firm QCP Capital published its latest assessment of the market's technical and macro outlook following the sharp decline of Bitcoin's (BTC) last week. The report noted that BTC has given back a large portion of its gains this year and that critical levels are being tested.

The institution noted that Bitcoin has declined 27 percent from its all-time high, stating, “The drop below the 50-week moving average and the weekly close falling below 100,000 dollars for the first time since May 4 has led to a more cautious tone in the market.”

QCP Capital, drawing attention to the frequently discussed cycle in the crypto market, stated that “the narrative that the four-year cycle is nearing its end is reinforcing the current bearish market sentiment.”

Key support level in BTC: 92 thousand dollars

According to the report, Bitcoin is currently located just above a strong technical support level. The institution stated, “BTC is holding above the key support at 92 thousand dollars. This level acted as a strong base in the last quarter of last year and the first quarter of this year.”

The price gaps that occur on weekends at the Chicago Mercantile Exchange are among the technical indicators that BTC has mostly filled in the past. QCP Capital noted that the $92,000 level corresponds to this yet-to-be-filled gap.

“The reaction rise may remain limited”

The report also emphasized that the upward movement could be limited: “The intense supply in recent weeks may constrain the strength of any potential rebound.”

QCP Capital, indicating that delayed economic data will start to be released in succession with the reopening of the U.S. government, stated, “With Washington resuming operations, the backlog of delayed economic data is about to hit the market.” The employment data for September, which was not released during the period the federal government was shut down, will be shared with the public on Thursday.

The institution, which indicated that risk appetite on the equity side is weak, said, “A defensive tone has emerged in the US indices, and the volatility index (VIX) remained above 20.”

“Investors are positioning themselves against the risk of a decline”

QCP Capital pointed out a significant hedging trend in the options market, stating: “BTC short-term implied volatility is above 50 and the skew has strongly shifted towards put options; this indicates an increased demand for hedging against downside risk.” While put options serve as insurance against price declines, the skew shows which direction the options demand is shifting. The increase in put demand reveals that investors are pricing in downside risks more.

“The easiest way is still downward”

The company also pointed to two critical levels that will determine the long-term trend: “The confirmation of the trend reversal depends on whether BTC breaks the critical supports at 88,000 and 74,500 dollars.”

QCP Capital concluded its report with the statement: “The bull cycle of crypto is hanging at a critical threshold. A short-term reaction rally may come; however, the easiest path still appears to be downward.”