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Crypto investment company QCP reported in today’s market assessment that momentum investors and trend followers have started using leverage again in August’s low liquidity environment. According to the company, this is one of the significant factors accelerating the current rally in exchanges and this wave may soon hit the cryptocurrency market and the gold market as well.
Wave of Risk-Taking in Markets Grows
According to QCP, the decrease in liquidity leading to lower trading volumes results in more severe and noticeable price movements. Analysts believe the current conditions make the situation attractive for investors seeking short-term gains, adding extra momentum to the markets.
Additionally, corporate stock buybacks have been cited as another strong factor behind this rally. Since the beginning of the year, the total amount of stock buybacks has reached $1.15 trillion. Goldman Sachs’ trading unit saw record levels of customer demand, especially during downturns. This indicates that major investors view pullbacks as buying opportunities. The strategy adopted by institutional investors may continue to support the rise in the stock market.
Potential Effects of the Current Wave on Cryptocurrencies and Gold
QCP analysts believe the current risk-taking trend may not be limited to stocks alone. According to analysts, the cryptocurrency market and gold may also be affected by this wave. Increasing upward demands for Bitcoin (BTC) could further elevate the price. Especially, the strengthening demand for upward Bitcoin positions in the options market supports this expectation.
Meanwhile, the upcoming elections in the U.S. continue to influence the markets. In the Bitcoin options markets, there are trends indicating a predominantly bearish expectation before the elections. There is a 6-point volatility difference between the pre-election and post-election periods, showing that investors are positioning themselves based on the election results.
Democrats do not have cryptocurrency support in their agenda, while Republicans promise to end the “illegal and anti-American cryptocurrency crackdown.”
