Analytics Firm Assesses the Recovery in Bitcoin and Ethereum: What Do They Expect Next?

Cryptocurrency analytics firm QCP Capital has released a statement highlighting the extraordinary resilience of Bitcoin (BTC) and the evolving liquidity dynamics between Bitcoin and Ethereum (ETH) in the broader cryptocurrency market.

According to QCP Capital, the Bitcoin price has made an impressive recovery and is trading above $60,000, where it started almost a week ago. This comes after a dramatic drop to $49,000 on Monday, marking the market’s worst single-day drop in years. The firm’s analysts described the rapid recovery as “incredible,” highlighting Bitcoin’s strength and resilience despite recent market volatility.

As the market heads into what is expected to be a relatively quiet weekend, QCP Capital shared two key observations regarding the state of the cryptocurrency market:

Changing Liquidity Dynamics Between Bitcoin and Ethereum

QCP Capital notes a significant shift in the liquidity profile between Bitcoin and Ethereum. As Bitcoin becomes increasingly integrated into mainstream macro capital markets, Ethereum appears to have been pushed to the sidelines. This trend can be attributed in part to the apparent lack of interest in Ethereum spot ETFs compared to the strong interest in Bitcoin spot ETFs.

The firm emphasized that Bitcoin’s “digital gold” trend continues to resonate strongly with investors, while Ethereum has yet to establish a similarly compelling narrative. This liquidity shift was particularly evident during Monday’s market crash, with Ethereum’s price falling 22% compared to Bitcoin’s 16% decline.

However, QCP Capital argues that this shift is not necessarily negative for Ethereum’s price. As a more speculative and volatile asset, Ethereum has the potential for greater price gains, albeit with greater downside risk. The firm observed that prior to the launch of the Ethereum spot ETF, the implied volatility difference between Bitcoin and Ethereum was around 5%. Now, that difference has grown to almost 20% and could widen further.

Structural Rise in Bitcoin

QCP Capital also noted a significant structural bullishness towards Bitcoin. Throughout the week, despite the extreme volatility, there was consistent demand for Bitcoin call options expiring in 2025 with strike prices approaching $100,000. This demand is evidence that the “digital gold” narrative has captured the imagination of institutional investors, according to QCP Capital.

*This is not investment advice.