The completion of Bitcoin’s fourth halving has left traders and investors speculating about the short-term market dynamics.
While the spot price of Bitcoin saw a slight increase over the weekend, not much significant movement was observed immediately after the halving event, QCP wrote in a recent note on Telegram.
Historically, the three previous halvings resulted in a substantial surge in the spot price of Bitcoin, but this exponential growth took place approximately 50 to 100 days after the halving.
If this pattern repeats itself, Bitcoin bulls may have a few more weeks to accumulate larger long positions.
QCP Expects Short Squeeze After Bitcoin Halving
In the short term, analysts at QCP anticipate a potential short squeeze led by Altcoins and Memecoins.
These alternative cryptocurrencies have been experiencing persistent negative funding rates, with some reaching as low as -100%.
A short squeeze occurs when short sellers are forced to cover their positions, driving the price of the asset higher due to the sudden surge in demand.
“What we could see in the short-term is a short-squeeze led by Altcoins and Memecoins which have seen persistent negative funding.”
Furthermore, QCP noted that Ethereum risk reversals have been normalizing to above -4%.
This improvement in speculative sentiment could trigger short covering and a resurgence of leveraged long positions in ETH.
QCP: After BTC's 4th halving, we could see in the short-term is a short-squeeze led by Altcoins and Memecoins which have seen persistent negative funding , with some as deep as -100%. With ETH risk reversals normalising to above -4%, improving speculative sentiment could see…
— Wu Blockchain (@WuBlockchain) April 23, 2024
QCP Trading Ideas
In light of these market dynamics, QCP suggests two trade ideas.
Firstly, for those with a structurally bullish view on BTC, QCP has noticed consistent large buying of BTC calls expiring at the end of the year and beyond.
They recommend exploring Extended Range Knockouts (ERKOs) as they offer an appealing risk-reward profile.
Two ERKO options put forward by QCP are the ERKO 27 Dec 2024 75/150k and the ERKO 28 Mar 2025 150/250k.
The former offers a maximum payout of 10.52 times the investment at a price of 7130 USD per BTC, while the latter presents an even higher maximum payout of 40 times the investment at a price of 2500 USD per BTC.
Additionally, QCP suggests building BTC long positions in the coming weeks, capitalizing on a significant discount around the 55k level.
This strategy aims to take advantage of the anticipated post-halving exponential rally.
To implement this approach, QCP recommends considering a BTC Accumulator with an expiry date of 6SEP24, providing a 20-week timeframe.
The strike price is set at 55,000 USD, reflecting a discount of approximately 19.70% from the current spot price, while the upper barrier stands at 80,000 USD, offering a potential upside of 10.61%.
As reported, digital asset investment products have faced another week of outflows, marking the second consecutive week of declining investor interest.
The outflows amounted to a total of $206 million, while trading volumes in exchange-traded products (ETPs) experienced a slight dip.
Bitcoin investment products witnessed outflows of $192 million.
However, few investors viewed this as an opportunity for short-selling, with short-Bitcoin strategies experiencing outflows of $0.3 million.
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