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Bitcoin’s Rally Isn’t Over – But a Drop to $110K Could Be Just What It Needs
Bitcoin has recently paused its upward momentum after breaking through the $120,000 mark. Profit-taking flows have capped the momentum built over the past week. The cryptocurrency eventually found a local bottom at $116,000, where bids re-emerged to support the price. However, QCP Capital suggests that another pullback towards $110,000 could potentially provide a more stable foundation for the current rally to consolidate.
Despite multiple headwinds, including elevated base tariffs and geopolitical tensions over Russian oil purchases, US equities have continued to hold firm. What’s more concerning is the S&P 500’s recent gains are largely driven by NVDA’s surge to fresh record highs, echoing the index’s move towards new peaks as the broader Magnificent Seven edge up. Meanwhile, the dollar index (DXY) remains down a staggering 10% year-to-date, which has fueled performance across USD-denominated assets, including equities, gold, and Bitcoin.
While in real terms these assets remain below prior highs when adjusted for the weaker dollar, QCP Capital believes that with net USD positioning now short but not yet extreme, there is an increasing risk of a sharp dollar rebound triggering a correction across risk assets.
US inflation remains stuck at 2.5% with no signs of further softening, leaving markets vulnerable to sudden price shocks, even as the Fed maintains guidance for potential rate cuts in the next quarter. This uncertainty around the timing of any policy pivot has introduced caution into the market.
In light of this backdrop, QCP Capital views a potential retracement towards $110,000 as a healthy consolidation level for the rally.
Source: cryptopotato.com
