- QCP Capital warns of greater volatility as we approach the holiday season.
- The digital asset trading firm claimed that thin liquidity in Bitcoin (BTC) and Ethereum (ETH) will drive wild price swings in the crypto market.
Lower Market Participation and Thinning Liquidity in Bitcoin and Ethereum
Looking back at the thin-liquidity hours in the last 24 hours, QCP noted that BTC fluctuated between $88K and $92K. ETH also logged a sharp spike from $2,910 to $3,150.
The steep trajectory of the two largest cryptocurrencies by market cap led to over $476 million in liquidations in the last 24 hours heading to Monday noon based on Coinglass data. Nonetheless, analysts at QCP considered the magnitude of the wrecked leveraged positions “relatively modest compared with typical levels seen this year.”
QCP explained that the market’s behavior may be due to declining public interest in crypto. Factors possibly driving the trend may include public fatigue, caution, or simple indifference as traders wait for a clearer indicator of the market’s next direction.
Citing Google data, QCP stated that interest in “crypto” and “BTC” has dropped to bear-market levels. Additionally, it pointed out that perpetual futures open interest is gradually falling, with Bitcoin accounting for a 44% dip from its October peak while ETH dives by over 50%.
Lower market participation and deteriorating liquidity could spark significant price moves in crypto assets, particularly BTC and ETH, even with smaller flows.
Scarcity Coming Up
Amid the cooling retail activity, QCP said institutional and whale investors are quietly accumulating Bitcoin. Excluding the recent 10,624 BTC purchase of Strategy (formerly MicroStrategy), around 25,000 BTC left centralized exchanges over the past two weeks.
The event suggests big holders are gradually moving their holdings either to self-custody or their contracted custodians. Bitcoin exchange-traded fund (ETF) issuers and digital asset treasuries (DATs) have notably accelerated their acquisitions, and their combined portfolio now exceeds the Bitcoin held by crypto exchanges.
Analysts of the trading form view the trend as a “meaningful shift that signals supply migrating into longer-term custody and tightening the available float.”
Crucial Support and Resistance
QCP identified the $84K line as a crucial support level for Bitcoin. At the same time, it pegged the asset’s psychological resistance at $100K. A clean break under the mentioned support or above the said resistance could signal a bearish or bullish phase for BTC. Given its positive correlation with BTC, analysts expect ETH to follow its path.
A key catalyst the firm is closely watching is the upcoming Federal Open Market Committee (FOMC), which will decide interest rates before 2025 closes.
