Cryptocurrency analytics firm QCP Capital recently assessed the current state of global markets, evaluating trends in both the equity and crypto sectors.
Chinese stocks fell after a week-long holiday ended as investors were disappointed by a government briefing that offered no new economic stimulus measures, sending the MSCI APAC stock index to its biggest decline in a month.
Meanwhile, US stocks also suffered losses, driven by declines in big tech stocks and rising geopolitical tensions. The VIX, often referred to as the “fear gauge,” rose to 22 points. However, crypto markets remained stable during this period, with front-end implied volatility trading at 43%, a 3-vol discount to 7-day historical realized volatility.
Bloomberg previously reported that Chinese investors may have been selling USDT to fund stock purchases since late September, while Bitcoin has been relatively flat. As the stock rally in China comes to an end, QCP Capital predicts capital could return to the cryptocurrency market, noting the sector’s growing maturity as an alternative risk asset.
The company also expressed caution on stocks in the short term, noting that risks related to the upcoming earnings season and the US Consumer Price Index (CPI) release could challenge current high valuations. Geopolitical tensions add further complexity to the market outlook.
Despite the immediate risks, QCP Capital remains bullish on cryptocurrencies in the medium term. The firm expects election-related headlines to continue to influence crypto prices. They pointed to a recent example where Elon Musk’s Polymarket comment that Trump was predicted to outperform Harris more accurately than traditional polls coincided with a surge in Bitcoin during the US market open.
*This is not investment advice.
