QCP Capital: USD Overvalued, Upcoming CPI Release Could Trigger Decline In DXY
In Brief
QCP Capital notes that the market is heavily long on the overvalued USD, which may explain the US Dollar Index’s struggle to gain momentum, with the upcoming CPI release potentially triggering a sharp decline in the DXY.
Cryptocurrency trading firm based in Singapore, QCP Capital published an analysis highlighting that the cryptocurrency markets have been relatively uneventful over the past two weeks. Despite ongoing tariff disputes between the US, Canada, and Mexico—along with new tariffs on China and US steel and aluminum imports—traditional financial markets have struggled to find a clear direction.
On Wall Street, there are no signs of panic, with credit yields still at low levels and credit spreads between investment-grade and junk bonds remaining stable. The VIX index is holding steady at 16, suggesting that investors have already taken protective measures against potential negative news, the firm noted.
In his Senate testimony, Jerome Powell emphasized the Federal Reserve’s “wait-and-see” approach to rate cuts, hinting at a slower pace of reductions in 2025. However, despite this cautious stance, the US Dollar Index (DXY) has failed to see any major rally.
Using data from the Commodity Futures Trading Commission (CFTC), QCP Capital pointed out that the market is heavily long on the dollar. Additionally, interest rate differentials suggest that the USD is currently overvalued compared to other currencies, which may explain why the DXY has struggled to gain momentum. With negative news likely already priced in, the analysis suggests that the USD could be at greater risk of a decline. Positive news could lead to a considerable unwinding of long dollar positions, potentially boosting risk assets. The upcoming Consumer Price Index (CPI) release could serve as a key trigger for a sharp decline in DXY.
Despite potential upside for other assets, Bitcoin (BTC) has underperformed compared to equities and gold, signaling caution within the cryptocurrency market. Liquidity remains low across new listings, and last week’s large-scale liquidation resulted in losses for many traders.
For those holding long positions in cryptocurrencies, QCP Capital suggests following institutional flows and purchasing downside protection, particularly since put options remain relatively inexpensive at this time.
Bitcoin Price Sees 1.88% Dip, Trading Above $96,000 Level
At the time of writing, Bitcoin is priced at $96,189, reflecting a decline of over 1.88% in the last 24 hours. The coin’s daily low and high were recorded at $94,940 and $98,209, respectively. Bitcoin’s market dominance has risen by 0.10% since yesterday, now standing at 60.33%. Additionally, the cryptocurrency saw nearly $44 million in liquidations over the past 24 hours, according to Coinglass data.
In the context of broader market movements, the global cryptocurrency market capitalization has decreased by 2.03% in the last 24 hours, currently sitting at $3.16 trillion. However, the total market volume has seen an increase of 5.47% within the same period, reaching $100.45 billion, as reported by CoinMarketCap.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
