QCP Capital Market Update – 20 Mar 24

– BTC spot ETF inflows peaked on 12 Mar at +$1,045m. Since then, net inflows have decreased and spot price has tumbled along as well (chart below).

– Overnight, we saw a nett outflow of -$326.2m which is the largest single day outflow to date.
– BTC had a knee-jerk reaction, trading to 60,770 lows but has since bounced back above 63,000.
– Does this mark the start of daily net outflows? Or is this just some pre-FOMC position squaring before a resumption of the uptrend?

FOMC (2am SGT tonight):
– The Fed previously signaled 3 rate cuts for the year. As expected, the market is pricing in 3 cuts with the first to happen in June.
– However, inflation has been sticky and energy, housing and supply-side costs have risen in the past few months.
– This could cause the Fed to hold back on cuts and today’s dot plots might show a change in signal to 2 cuts instead of 3.
– If this hawkish surprise happens, it would be bearish for BTC spot price.

– Our view is that the bull market is NOT over. We are in the middle of a broad liquidity rotation that will likely take BTC to new highs post-halving.
– However, the near-term correction could be violent given the amount of leverage that remains.
– We think the best way to play this is a zero-downside strategy with high topside convexity like the Enhanced Sharkfin which has a 6-200% return profile.
– The principal protection eliminates worry on a sharp correction while retaining profitability if BTC breaks new highs.