Cryptocurrency Market Sees a Recap Last Friday, Closing Q1 of This Year
The cryptocurrency market experienced yet another pullback last Friday, marking the end of Q1 of this year. QCP also released a report yesterday (1) summarizing that Bitcoin, Ethereum, and the S&P 500 index all recorded their worst quarterly performance in nearly three years during the first quarter of this year. How will the market evolve moving forward? Let’s take a look at what analysts have to say.
Background Information
Arthur Hayes latest: Fed may “give up resisting inflation” to restart QE, Bitcoin expected to surge to $250,000 by the end of the year.
Ethereum Hell Mode: ETH/BTC exchange rate has fallen to a five-year low, failing to outperform Bitcoin for the first time during the halving cycle.
Disappointing Q1 Performance Amidst Tariff Policies and Persistent Inflation
Due to factors such as Trump’s tariff policies and America’s stubborn inflation, the performance of cryptocurrencies and U.S. stocks in Q1 of this year has been disappointing. QCP also pointed out in their report released on their official Telegram channel yesterday (1) that Bitcoin, Ethereum, and the S&P 500 index all recorded their worst quarterly performance in nearly three years, with the second quarter starting under pressure:
Since last Friday, the total market capitalization of the cryptocurrency market has evaporated by more than $160 billion, highlighting the severe challenges faced at the start of the second quarter.
U.S. Stocks Await Trump’s Tariff Announcement
Last night, after the U.S. stock market opened, trading was quiet as most investors focused on Trump’s new round of reciprocal tariffs to be announced on April 2, Eastern Time. The four major indices closed slightly higher, with only the Dow Jones Industrial Average experiencing a slight decline of 0.03%.
- S&P 500 Index rose by 21.22 points or 0.38%, closing at 5633.07 points.
- NASDAQ Index rose by 150.6 points or 0.87%, closing at 17449.89 points.
- Philadelphia Semiconductor Index rose by 12.03 points or 0.28%, closing at 4282.46 points.
Bitcoin Approaches $85,000
Regarding Bitcoin, around 22:00 last night, it quickly dropped to $82,500 but soon rebounded with the U.S. stock market, reaching a high of $85,555 in the early morning. It is currently challenging to hold above the $85,000 mark.
What Events to Watch in the Short Term?
QCP explained that the market pullback over the past weekend was primarily due to large-scale options expiring at the end of the quarter, triggering market sell-offs:
Traders actively sold, causing the perpetual contract funding rate to shift from neutral to negative; meanwhile, the de-leveraging in the cryptocurrency market coincided with macro data bringing further blows: core inflation data came in higher than expected, confirming persistent inflation in February.
QCP further pointed out that although April is typically a month with relatively good cryptocurrency returns, investors should remain cautious. In addition to Trump’s tariff policy announcement on April 2, the economic data and events to watch this week include:
- Tuesday: ISM Manufacturing PMI, JOLT Job Openings.
- Thursday: ISM Services PMI.
- Friday: Nonfarm Payroll Data, Unemployment Rate, Fed Chairman Powell’s speech.
Matrixport: Bitcoin Spot ETF Momentum Weakens
Additionally, as a key factor supporting Bitcoin prices, Matrixport released a report yesterday (1) on platform X indicating that Bitcoin spot ETFs have seen net outflows for two consecutive months, with retail speculative sentiment remaining low. It seems challenging for ETF funds to recover in the short term:
Bitcoin ETFs have experienced net outflows for the second consecutive month. Although the year-to-date fund inflow remains positive ($1.05 billion), this figure is primarily due to a significant inflow of $5.3 billion in January.
However, recent ETF performance has clearly weakened, especially compared to safe-haven assets like gold. Fund flows indicate that Bitcoin ETFs remain highly dependent on favorable financing rates and arbitrage opportunities rather than widespread investor interest. Given the continued low speculative sentiment among retail investors in the crypto market, substantial inflows into Bitcoin ETFs seem unlikely in the short term.
Fidelity: Bitcoin May Initiate a Second Bull Wave
Nevertheless, regarding future market directions, Fidelity Digital Assets pointed out in a recent report that although Bitcoin has experienced a significant pullback since Trump’s inauguration, based on historical data, Bitcoin may not have yet reached the peak of this bull market cycle. On the contrary, Bitcoin might be on the verge of entering the next acceleration phase, and once it starts, its starting point could be around $110,000.
Fidelity analyst Zack Wainwright explained that the typical characteristics of Bitcoin’s acceleration phase are high volatility and high returns, similar to when Bitcoin broke through $20,000 in December 2020. Despite a negative return of 11.44% for Bitcoin this year-to-date and a 25% pullback from historical highs, the recent pullback aligns with the average depth of pullbacks following acceleration phases in past cycles.
However, it is noteworthy that the analyst also pointed out that while Bitcoin may welcome a new round of increases, this cycle appears to be gradually approaching its end.
Related Reports
- BlackRock CEO’s Full Investor Letter: Bitcoin is Eroding the Dollar’s Reserve Status; Tokenization Will Lead the Capital Revolution.
- MicroStrategy’s Stock Price Has Tripled Since Last October: Analyzing Bitcoin’s Financial Magic.
- Breaking News: Bitcoin Mining Company Hut 8 Partners with Trump’s Son to Establish New Mining Company “American Bitcoin.”