Cryptocurrency market maker Wintermute spoke this week about their expectations for Bitcoin and altcoins. Here are the details.
Cryptocurrency market maker Wintermute reported in its latest market analysis that Bitcoin has been stuck in a narrow range for about two months and that US-originated selling pressure is determining the market’s direction.
According to Wintermute’s analysis, Bitcoin continues to trade in the $85,000-$94,000 range after its failed attempt to rise towards $97,000 at the beginning of January. The record outflows seen in Bitcoin and Ethereum ETFs last week, along with the decline of Coinbase’s premium to discounted levels, reveal that US investors are net sellers. Europe is a marginal buyer, while Asia is largely neutral, with the US being the main factor determining the direction.
The analysis notes that the cryptocurrency market has failed to find a clear direction in the last two months, while gold and silver reaching record highs during the same period suggests that the “dollar depreciation” theme is more strongly at play in these assets. Wintermute argues that Bitcoin’s “digital gold” narrative has not yet fully materialized during stressful times.
On the volatility front, there’s a noticeable stagnation. The fact that implied volatility is tight across all maturities indicates low market participation and that investors are unwilling to pay a premium for strong price movements. While a partial divergence between Bitcoin and the Nasdaq has been observed since January, it’s noted that this correlation could quickly reverse in a true “risk-averse” environment. In particular, there are warnings that if the AI trend disappoints during earnings season, stocks could drag crypto down as well.
Wintermute argues that this narrow price range, which has persisted for 60 days, is unusual for Bitcoin. They state that the $85,000 level has acted as strong support so far, finding buyers on every pullback, and that institutional investors have been trading within this range, while individual investors have largely been waiting for the right time. They point out that the January surge coincided with strong ETF inflows, followed by an acceleration of ETF outflows. The company concludes, “ETFs set the momentum in this market; when that demand disappears, directionless and volatile price movements become inevitable.”
Looking ahead to next week, Wintermute points to four key themes that could impact markets: artificial intelligence, interest rates, the trajectory of the dollar, and geopolitical developments. While a rate cut by the Fed is not expected, the dot plot and Jerome Powell’s tone will be closely watched. A hawkish stance on inflation could strengthen bond yields and the dollar, putting pressure on risky assets. According to the analysis, continued uncertainty regarding tariffs could drive demand for safe-haven assets towards gold, creating a negative short-term outlook for cryptocurrencies.
On the other hand, it is stated that the earnings reports to be announced by Microsoft, Meta, Tesla, and Apple will be critical, especially in terms of the signals they will give regarding the revenue generation potential of artificial intelligence spending. A positive picture would support risk appetite, while margin pressure or a rollback in spending could drag down the Nasdaq and indirectly cryptocurrencies. On the dollar front, a coordinated move by the Fed in favor of the yen and expectations regarding the risk of a government shutdown in the US stand out as factors that could weaken the dollar.
Wintermute, in its overall assessment, states that the range-bound movement could continue as long as the $85,000 level remains intact. Describing the current outlook as more of a consolidation than a decline, the company notes that a positive turn in ETF flows or a clear weakening of the dollar would be key catalysts for a more convincing breakout above the $90,000-$95,000 levels for Bitcoin. Conversely, a hawkish Fed statement or increased trade tensions could lead to a strong retest of the $85,000 level.
