QCP Capital Issues Cautious Outlook for Crypto Markets Ahead of Fed Meeting, Citing Potential Volatility Amid Decreasing Liquidity and Technical Signals for Bitcoin (BTC)

The firm also noted growing optimism for crypto in 2025, fueled in part by speculation surrounding Donald Trump's return to office and emerging Bitcoin-related policy proposals.

Financial services firm QCP Capital has issued a warning about potential market volatility ahead of the final Federal Reserve meeting of 2024.

The firm anticipates the Fed will announce a 25 basis point rate cut during the December meeting, but noted that the central bank will likely maintain a hawkish stance.

According to QCP Capital, the Fed's final dot plot for the year will signal three rate cuts in 2025, indicating the central bank’s pivot toward looser monetary policy.

However, the firm warns that the Fed will remain non-committal on the pace of rate cuts next year.

"We anticipate tonight’s statement and dot plot to carry a slightly hawkish tone, reflecting US inflation stabilizing above the Fed’s 2% target and a robust labor market," QCP stated in its market note.

The firm also highlights potential risks in the crypto market, with thinning liquidity across global markets that could amplify price swings and trigger large-scale liquidations.

From a technical perspective, QCP points to an "evening star" pattern on Bitcoin's daily chart and bearish divergences, indicating caution.

Despite the short-term price drops, the firm advises traders to "stay the course," especially considering the optimism for 2025.

"With 2025 poised to be a potentially bullish year for crypto, particularly with Trump in office, staying the course may prove beneficial," QCP added.

The bullish sentiment for next year aligns with emerging narratives about Bitcoin's role in future U.S. economic policy.

The Bitcoin Policy Institute has reportedly drafted a proposed Executive Order, which would establish a strategic Bitcoin reserve (SBR) under Trump's administration.

The draft outlines plans to consolidate Bitcoin holdings across U.S. federal agencies and designate Bitcoin as a strategic reserve asset, enhancing financial security and fostering economic leadership.

The draft policy emphasizes Bitcoin's decentralized nature and potential as a "digital gold," with the proposed SBR to be managed by the U.S. Treasury Department's Exchange Stabilization Fund (ESF).

As stated in the document, the initiative aims to "cement American financial dominance long into the future" and expand the diversity of U.S. reserve assets.