QCP Capital: Bitcoin and Ethereum Experiencing ‘Buy the Dip Moment’

QCP Capital highlights the possibility of the US Federal Reserve being pressured to follow suit with other Central banks.

Singapore-based crypto trading firm QCP Capital says Bitcoin (BTC) and Ethereum (ETH) are currently seeing a “buy the dip” moment. The firm attributed the dip to mixed economic data released in the United States on Friday.

How Bitcoin and Ethereum Reacted to US Economic Data

According to reports, the non-farm payroll data showed a stronger-than-expected job market progress following a tumultuous economic growth streak. Specifically, 272,000 people were employed in May, exceeding the forecast of 185,000. Despite this, unemployment rose slightly from 3.9% to 4%.

These mixed economic data, together with uncertainties regarding inflation numbers triggered a risk-averse reaction from investors who pulled back from riskier assets like Bitcoin and Ethereum. However, QCP Capital interprets this pullback as a buying opportunity for the leading cryptocurrencies. QCP Capital noted that its trading desk reportedly observed “bullish flows” during the dip, with investors taking positions that suggest a potential rebound.

In the crypto market, the idea of “buying the dip” is a common strategy, where investors attempt to capitalize on temporary price drops with the expectation of future price increases.

The price of Bitcoin dropped from around the $72,000 price level to $69,000 on Friday. As of this writing, BTC is trading at $69,443, demonstrating a nominal increase of 0.09% in the past 24 hours. Likewise, Ethereum followed a similar path, and it is now trading at $3,676.

Expectations of an Interest Rate Cut in the US

Individuals and market analysts believe that at least one more interest-rate cut is in view from the US. For Bitcoin, a future rate cut could set the cryptocurrency up for a new bull run. Federal Reserve officials anticipate at least three 25-basis points rate reductions this year.

QCP Capital highlights the possibility of the US Federal Reserve being pressured to follow suit with other Central banks. “It will be difficult for the US to ignore as the rest of the world continues to cut rates,” the firm noted.

Recent rate cuts by the European Central Bank and the Bank of Canada illustrate this point. BitMEX co-founder Arthur Hayes sees the move as a positive catalyst for the crypto market. He emphasized that these rate cuts are an attempt by G7 Central Banks to close the interest rate differential with Japan, thus strengthening the yen indirectly.

Despite QCP Capital’s prediction of eventual US rate cuts, the near future seems to suggest otherwise due to current statistics. Financial data providers like CME Group forecast a near-certain chance (99.4%) that the upcoming FOMC meeting will maintain the current interest rate.

However, economist sentiment, as gauged by a poll from Reuters, aligns more with QCP’s view. The poll suggests a possibility of the Fed initiating rate cuts twice this year, with the first one potentially happening in September.