Key Points
- QCP Capital predicts a quiet summer for the crypto market due to lack of major catalysts.
- Miner capitulation following Bitcoin’s recent halving event is affecting the market’s recovery.
QCP Capital, a Singapore-based crypto trading firm, has recently forecasted a subdued summer for the cryptocurrency market. This prediction is based on the absence of significant catalysts that could propel the market in either direction.
On June 14, QCP shared a market analysis on its Telegram channel. The analysis highlighted the challenges Bitcoin is facing in its recovery following the Federal Open Market Committee (FOMC) meeting, despite a robust momentum in equities. This stagnant behavior is attributed to miner capitulation after the recent halving event.
Miner Capitulation and its Impact
The halving event, which slashed block rewards from 6.25 BTC to 3.125 BTC, has made it challenging for miners to profit. This financial pressure is causing miners to sell their Bitcoin holdings, a phenomenon known as miner capitulation, which usually exerts a downward pressure on BTC prices.
The issue is highlighted by a significant drop in the network hash rate, implying that less efficient miners are leaving the market due to reduced profitability. However, it should be noted that the remaining miners often become more profitable as the difficulty adjusts. Data from Blockchain.com indicates that the network hash rate has fallen from 657 EH/s on May 27 to 586 EH/s.
Adding to the market’s challenges, FlowBank, a Swiss bank involved in a triparty agreement with crypto exchange Binance, is currently undergoing bankruptcy proceedings. The Swiss Financial Market Supervisory Authority (FINMA) stated that the bank had seriously breached operational standards required for banking and does not possess the minimum capital necessary for its business operations.
Ethereum’s Strategic Opportunity
Furthermore, the analysis suggests that Ethereum currently presents a strategic opportunity for traders. For the short term, QCP Capital reiterated its prediction of no major immediate price movements for ETH.
This is because Securities and Exchange Commission (SEC) Chair Gary Gensler anticipates the approval of a spot ETH exchange-traded fund (ETF) by late summer. However, according to QCP, this could act as a significant catalyst for future price appreciation. It advises traders to consider accumulating Ether this quiet summer as long as its value is under $4,070.
QCP expects this spread to narrow as more Ether overwriters return to the market in anticipation of the S-1 Form approval later this summer.
Notably, in May, the SEC approved 19b-4 filings for Ether spot exchange-traded funds (ETFs) from several major firms, including Grayscale, BlackRock, Fidelity, Bitwise, ARK 21Shares, VanEck, Franklin Templeton, and Invesco Galaxy. These financial giants are now gearing up for the approval of their S-1 Forms from the regulatory agency.
