QCP: Crypto market weakness likely short-term

Analysts believe that the recent geopolitical tensions in the Middle East will have a short-lived impact on Bitcoin and other cryptocurrencies.

The selloff was triggered on October 1 when Iran launched ballistic missile attacks against Israel, causing Bitcoin (BTC) to drop alongside Ethereum (ETH) and major altcoins, with the overall crypto market declining by about 4%. As a result, Bitcoin traded below $60,500, prompting market observers from QCP Capital to predict further price dips before a rebound. Their technical analysis indicated a short-term bearish outlook for BTC.

Ethereum also fell below $2,400, while Solana retraced to under $137. Despite October typically being a strong month for digital assets, the market experienced consecutive declines. QCP analysts noted that this weakness is likely temporary, pointing to the strong correlation between crypto prices and U.S. stock performance. They anticipate that as U.S. equities recover, cryptocurrencies will follow suit, driven by broader macroeconomic factors.

In a note dated October 3, QCP expressed optimism that anticipated interest rate cuts and robust U.S. labor market data could propel Bitcoin and altcoins to higher prices.

Bullish Sentiment for Q4

Ryan Lee, chief analyst at Bitget Research, echoed this bullish sentiment for Bitcoin in the fourth quarter. He noted a 16% decline in trading volume as investors remained cautious amid geopolitical and macroeconomic developments. However, Lee pointed to CryptoQuant data indicating sustained institutional interest in Bitcoin.

Despite the overall downturn, institutional investors are reportedly purchasing digital assets at rates equal to or exceeding daily Bitcoin production. Currently, Bitcoin is holding above the $60,000 support level and could potentially fluctuate in the $72,000 range, particularly in light of expected Federal Reserve interest rate cuts and the historically positive performance of Bitcoin in Q4.