QCP Capital believes the current Crypto Fear & Greed Index reflects a broader easing of risk aversion

The QCP Capital Broadcast revealed that the crypto industry depicted a broader easing of risk aversion on March 24 after its Fear & Greed Index approached the neutral (49%) mark. The Crypto Fear & Greed Index has surged from 32% last week to 45% this week.

The firm also believes that Powell’s remarks at last week’s FOMC meeting, though measured, helped soothe investors’ nerves amid recessionary concerns. Starting in April, the Fed decided to scale back its “quantitative tightening” program. 

QCP Broadcast suggests that crypto industry was easing risk aversion

Asia Colour – 24 Mar 25

1/ Crypto markets bounced but will it last? $BTC and $ETH reclaimed $65k and $2k over the weekend, tracking a strong rebound in equity futures. The Fear & Greed Index jumped from 32 to 45, hinting at easing risk aversion.

What's really driving the move?

— QCP (@QCPgroup) March 24, 2025

The QCP Capital Broadcast noted that the crypto ecosystem was recovering following weeks of decline due to President Trump’s tariff threats and fears of a recession. The broadcast referred to the Crypto Fear & Greed Index, which improved from 32% last week to 45% this week. The firm argued that the rise towards 49%, which was neutral, indicated a broader easing of risk aversion in the market.

The crypto markets also showed a modest rebound over the weekend, with Bitcoin and Ethereum breaking back above $85K and $2K, respectively. The firm highlighted that the recovery appeared to have been led by equities, with equities futures clocking in a solid bounce. 

QCP noted that the momentum was mostly driven by BTC ETF inflows, which increased with 8,775 BTC (equivalent to $744M) purchased last week. The Singapore-based company argued that it marked a sharp reversal after several consecutive weeks of net outflows. The firm also said that it signaled early signs of liquidity rotating back into crypto markets.

The crypto trading company maintained that the rally appeared driven by genuine spot demand rather than leverage since perp OI was still subdued, and funding rates remained flat. QCP argued that it was a critical distinction given that leverage-fuelled moves tend to unwind abruptly on liquidations.

The Telegram broadcast channel said that they remained cautious on prospects for a sustained breakout higher despite the renewed ETF momentum and today’s follow-through rally. The firm also believes that the upcoming tariff escalations slated for April 2 could once again pressure risk assets.

The company also highlights that the options market reflected a more neutral wait-and-see stance, with implied volumes trending lower and risk reversals turning flat across all tenors. QCP argued that it starkly contrasted the more bearish skew observed just a week ago. The firm said it will be watching closely to see whether this week’s recovery will mirror last Monday’s price action, where crypto rallied on Sunday only to retrace sharply within 48 hours.

QCP believes Powell’s FOMC remarks helped soothe the market

Asia Color – 20 Mar 25

1/ Last night’s FOMC meeting delivered the catalyst markets had been waiting for, pushing $BTC past $85K in a sharp rally. The driver? The Fed scaling back quantitative tightening starting in April. Markets see this as an indirect rate cut.

— QCP (@QCPgroup) March 20, 2025

The Federal Reserve decided to keep interest rates at its target range of 4.25% to 4.5% during the FOMC meeting last week. Policymakers expect to see two rate cuts coming this year, while their economic outlook also called for higher inflation and lower economic growth. Powell noted that economists outside the central bank had increased their estimated chance of a recession but said that a severe economic downturn was still not likely.

“We don’t make such a forecast. If you look at outside forecasts, forecasters have generally raised… their possibility of a recession somewhat, but  still at a relatively moderate level…[it] has moved up, but it’s not high.”

–Jerome Powell, Chair of the Federal Reserve of the United States.

QCP believes that the markets interpreted the Fed’s decision as an indirect rate cut, which reinforced expectations that the Fed will begin easing as soon as June. At the time of publication, three rate cuts are being priced for 2025, with expectations for them in June, September, and December.

The broadcast channel also noted that policymakers downgraded economic growth projections to 1.7% (a 0.4% reduction) while raising their inflation forecast to 2.8%. QCP Capital believes that the Fed’s tone was notably cautious, and the inflation data signaled a growing risk of stagflation. 

The firm also highlighted that the Fed’s dot plot revealed a more hawkish shift from the one in December, with the number of officials forecasting no rate cuts in 2025 increasing to four. The broadcast channel stated on Friday that market positioning had normalized on the options front, with skew shifting back toward calls.

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