In December, Bitcoin captivated attention by breaching the $90,000 threshold, bolstered by growing expectations of a Federal Reserve interest rate cut. However, Singapore-based trading firm QCP Capital warns of potential resistance around the mid-$90,000 band. The current environment of persistently high inflation in the US could limit further upward movement at these levels.
Rally Driven by Fed Expectations Faces Inflationary Headwinds
Optimism in the cryptocurrency market was rejuvenated by increased expectations that the Federal Reserve might cut interest rates in December. This development rekindled interest in risk assets, with Bitcoin rapidly climbing above $90,000. Nonetheless, QCP Capital analysts remain cautious, suggesting the macroeconomic outlook does not fully support this optimism. Inflation remains high, and global liquidity continues to be constrained.
The firm identifies the $80,000–$82,000 range as the main support area for Bitcoin, but notes that supply pressures could restrain growth around the mid-$90,000 level. QCP Capital’s analysis points out that the rise is not supported by strong short-term buyers but by limited liquidity. The firm also emphasizes that substantial inflows into US-based Bitcoin ETFs have not yet commenced.
Underlying Fragility of the Rally Revealed
Beyond the cryptocurrency market, fluctuations in the artificial intelligence sector are also influencing Bitcoin’s trajectory. QCP Capital reminds us that increased inventories and collection risks for giants like Nvidia are undermining confidence in AI-themed stocks. The rise in credit default swaps (CDS) indicates a decline in investor risk appetite.
The company asserts that the release of ChatGPT at the end of 2022 sparked significant bullish momentum for risky assets in the AI sector, from which Bitcoin also benefited. However, current fragility suggests this support might weaken. Overall, QCP’s assessment indicates that the recent rise is merely a limited response within a tightening market liquidity framework.