In its latest Market Observation released on February 25th, QCP Asia highlights significant developments in the cryptocurrency market. Notably, Bitcoin has decisively broken its recent range, plunging below $90,000—a threshold it had maintained for nearly a month. This decline triggered liquidations exceeding $200 million within just a few hours. The ongoing geopolitical tensions, notably from the imposition of tariffs on Canada and Mexico and restrictions on Chinese investments, have exacerbated a bearish market sentiment. Concurrently, there has been a noticeable uptick in short-term options hedging, with the 1-month implied volatility escalating to 50, indicating increased market uncertainty.
From a broader perspective, while initial economic indicators pointed towards potential market softness, traditional markets such as stocks, fixed income, and gold have demonstrated resilience, absorbing these shocks efficiently. Nonetheless, the recent surge in Bitcoin dominance coinciding with the drop in altcoin valuations implies that altcoin investors may have fully positioned themselves, redirecting any new US dollar influx solely towards Bitcoin. Furthermore, institutional demand, primarily driven by entities like MicroStrategy and Metaplanet, continues to play a pivotal role, although the cryptocurrency issuance market appears to be nearing saturation, potentially limiting future performances.