Bitcoin briefly dropped to $76,700 after the latest inflation data before recovering toward $78,000. According to QCP Capital, this “contained” reaction is a sign that markets have largely absorbed the prospect of a 25-basis-point rate hike.

The firm explained that BTC’s technical setup remains constructive at current levels, although conviction is still dependent on the broader market response to this week’s events.

Two Very Different Bets

Bitcoin is trading above a major support zone at $75,000 to $76,000 while resistance stands at $80,000 to $82,000. Ethereum is showing a significantly different flow picture. Spot BTC ETFs recorded $462.7 million in net outflows during the holiday-shortened week. However, Friday’s withdrawal slowed sharply to $13.2 million compared with $282.7 million on Thursday.

Ethereum ETFs, meanwhile, recorded nearly $197 million in net inflows for the week. Friday’s $216.4 million influx helped drive the weekly total higher despite earlier outflows. QCP Capital said that the divergence indicated differentiated positioning between the two crypto assets. Ethereum is facing resistance at $2,500 to $2,550, while support sits at $2,400 to $2,425, and a secondary support zone is located at $2,300 to $2,350.

Bitcoin volatility also remains relatively low. QCP Capital stated that the volatility curve is still upward sloping while the 25-delta risk reversal is around negative 3 volatility points. Puts are therefore moderately more expensive than calls, even as positioning remains well below stressed levels. The firm added that traders are staying hedged rather than taking a strong directional position.

Bitcoin’s Resilience Against Tech Rout

There are several factors that could influence risk appetite for crypto. For instance, oil prices have moved higher following a drone attack that temporarily shut Saudi Arabia’s East-West pipeline. A prolonged disruption could add pressure to risk assets through higher energy costs and tighter financial conditions.

At the same time, Artificial Intelligence-linked equities have come under pressure following public discussions about slowing AI development over safety concerns. QCP Capital said that Bitcoin’s relative resilience compared with the sharper declines across technology and semiconductor stocks is a constructive sign for its “uncorrelated positioning.” But a deeper unwind in crowded technology trades could still spill into crypto through weaker overall risk appetite and tighter liquidity.

Crypto markets also have a separate regulatory catalyst in Washington. Tuesday’s expected Senate procedural vote on the updated CLARITY Act could clarify the respective roles of the SEC and CFTC.

This is expected to strengthen the medium-term case for institutional adoption by reducing regulatory uncertainty, but procedural progress would not guarantee final passage.

More on the crypto market’s state and the upcoming key events can be found in our video below.

Source: CryptoPotato