QCP data reveals a bearish outlook on Bitcoin due to macroeconomic factors

Macroeconomic factors have heavily destabilized crypto assets, causing uncertainty among digital asset investors. According to QCP, bearish sentiment reigns supreme among digital assets such as Bitcoin after Fed minutes revealed the central bank’s hawkish stand moving forward.

According to data from QCP, crypto prices have plummeted due to headwinds from macroeconomic factors. The investment firm explained that macro headwinds are undermining crypto prices, especially with Fed minutes revealing that the U.S. central bank will adopt a more hawkish stance moving forward.

The Fed hints at slowing rate cuts to curb rising inflation

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The Federal Reserve has continuously indicated that it will slow down economic policies that pace rate cuts following increased risks of a possible rise in inflation. Barchart, a financial markets trading and investing tool provider, reported a less than 5% chance that the Fed would cut rates this month, prompting a 95% chance of maintaining the current rate range of 4.25%- 4.5%. 

During a press briefing, the Federal Reserve chair Jerome Powell suggested a lesser likelihood of further interest rate cuts in 2025 after announcing a 25 bps cut to the Federal funds rate in December 2024. The rate cut could mark the end of a series of rate cuts initiated by the Fed since September. The central bank cut rates by 50 bps in September, 25 bps in November, and another 25 bps in December, as anticipated by analysts.

Powel acknowledged that U.S. inflation has significantly improved since 2022. However, he cautioned that Trump’s incoming tariff policies, immigration regulations, and tax proposals could impact inflation, prompting the Fed to adjust the rates accordingly.

Trump’s tariff policies could spike inflation in the U.S.

According to the Fed chair, experts believe that Trump’s promised policies could increase inflation pressures, prompting the Fed to adjust interest rates accordingly. He also explained that the Federal Open Market Committee was investigating how tariffs can affect inflation once implemented by the incoming president.

On January 8th, the ADP employment survey revealed a declining trend in hiring and wage gains. The trend reinforces the prevailing macro uncertainty. However, Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) data painted a different narrative showcasing a stronger labour market. The scale appears to be falling on the bearish sentiment side, which aligns with the broader crypto market outlook.

According to data from the crypto data aggregating platform CoinGecko, Bitcoin has declined by 1.6% in the last 24 hours, adding to its seven-day dip of 3.2%, as traders and short-term crypto investors react to the prevailing market conditions. Bitcoin appears to be trading within a daily range that has been holding since 26 November last year. 

The range further cements the uncertainty in the markets ahead of President-elect Donald Trump’s inauguration on 20th January. Data from CoinGecko shows that the global crypto market capitalization has declined by 3.1%, settling at 3.4 trillion at the time of this publication.

Speculations on the U.S. government liquidating its Bitcoin stash arise

The uncertainty is also fueled by rumours that the U.S. government could liquidate its Bitcoin stash worth approximately $6.5 billion. The Northern District Court of California allegedly gave the U.S. Department of Justice (DOJ) the green light to liquidate 69,370 Bitcoin.

The court’s ruling was handed down by the chief U.S. district judge Richard Seeborg, who also denied a motion to obstruct the forfeiture of the assets, according to court filings dated 30 December. The liquidation could trigger market volatility and add to the ongoing bearish sentiment in the crypto sector.

Trump promised the crypto community he would not liquidate the government-held Bitcoin while speaking at the Bitcoin Conference 2024. However, the current Biden-Harris administration still holds authority over the assets and could begin liquidating the digital assets at any time until Trump is sworn in.

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