Analysts at QCP Capital foresee a surge in liquidity favoring high-risk assets in the coming period.
In a report dated February 16, experts express optimism as liquidity returns to risk assets, although they caution that stable inflation rates above 3% present a downside risk that could amplify market volatility.
“To cater to investors maintaining a bullish stance while becoming increasingly defensive against potential downturns at current levels, we offer an Upside Participation Structure (UPS) providing 100% protection on the principal investment amount while leveraging the upside potential using yields,” stated QCP Capital analysts.
The recent uptick in CME margin requirements has emerged as a significant trigger for volatility, according to analysts. This adjustment caught leveraged traders off-guard, resulting in widespread short covering during the relatively thinly traded Lunar New Year weekend. Consequently, both spot and forward prices experienced an increase.
“The forward spread trade in BTC has now returned to approximately 11-12% annually,” the QCP Capital report highlights.
Earlier assessments from QCP Capital suggested that a notable accumulation of positions on call options, ranging from $60,000 to $80,000, alongside a surge in demand for ETFs, could propel Bitcoin (BTC) to all-time highs (ATH) as soon as March. QCP Capital elucidated that the dynamics within the options market, coupled with the breakout above $50,000, were fueled by heightened demand for spot ETFs.
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