- BlackRock CEO Larry Fink has called Bitcoin a "quality" investment.
- The cryptocurrency's haven-like status will perhaps be tested, as risks mount in both the stock and bond markets.
Happy Thursday!
The last three months of the year may see a sell-off in equities, says Singapore-based crypto trading firm QCP Capital. And it may take Bitcoin down with it.
Let’s dive into it.
Possible Q4 sell-off
BlackRock CEO Larry Fink said on Fox Business on Monday that the recent Bitcoin price action indicated a “flight to quality” in a period of macro uncertainty.
“We’re hearing from clients around the world about the need for crypto,” said Fink, who claimed there was “pent up interest” in digital assets.
Ark Invest CEO Cathie Wood and Galaxy Digital boss Mike Novogratz have shared similar optimism about whether the US Securities and Exchange Commission will approve a spot Bitcoin exchange traded fund — a potentially huge boon for the industry.
However, analysts at QCP Capital warned on Wednesday of a possible macro risk-off in the fourth financial quarter of the year.
“Risks are firmly tilted to the downside from here for equities and bonds, where a sell-off on both will drive a major risk-parity catastrophe,” said the report.
“The jury is also out on whether BTC will rally on a ‘flight to quality’ as Blackrock CEO Larry Fink expects, or sell-off as a high-beta risk asset in such a risk-off.”
In such a scenario, Bitcoin could either function as a haven asset akin to gold or plunge with stocks, said the analysts.
“Our main reason for being bearish on equities is the extreme consensus view related to the Q4 seasonal rally,” explained the report, before adding that escalation in the Israeli-Palestinian war — especially the possibility of US or Iranian forces being dragged into the conflict — was also a prime concern.
A sharp move down from the tech-heavy Nasdaq would no doubt drag Bitcoin lower, too, the analysts said. If it proves resilient, expect a rally.
Crypto market movers
- Bitcoin rose by 0.6% in the last 24 hours, and is priced at $28,500.
- Ethereum is down 1.1% in the last 24 hours, and is trading at $1,550.
What we’re reading
- Hong Kong public grows cautious of crypto on the back of JPEX scandal — DL News
- European Central Bank opens two-year project to develop digital euro — DL News
- Accounting firms aim to replace ‘dangerous’ Proof of Reserves approach used by crypto giants — DL News
Tom Carreras is a Markets Correspondent at DL News. Got a tip? Reach out at tcarreras@dlnews.com