Crypto markets ended the first quarter with their worst performance in three years

A fresh analytical report from trading firm QCP Capital contains a troubling statistic: the Bitcoin, Ethereum, and S&P 500 index markets ended the quarter with their worst performance in three years.

Cryptocurrency market capitalization decreased by over $160 billion since Friday, marking a difficult start to the second quarter as traders continue to search for bullish momentum following a quarter that saw the Bitcoin, Ethereum, and S&P 500 index markets experience their worst performance in three years.

According to QCP Capital, the sharp drop on March 28 was driven by large expirations at the end of the quarter, when dealers sold aggressively, resulting in a shift in funding on perpetuals from stable to negative. The reduction in leverage in the crypto market coincided with macroeconomic news, with core inflation coming in above expectations, confirming more robust price growth in February, while consumer spending remained subdued.

Markets are awaiting the next potential catalyst, which will be Trump's "Release Day" on April 2, when the U.S. president will unveil a broad set of retaliatory tariffs.

With consumer confidence at a 12-year low and stock markets already hurting, having suffered a 4-5% weekly drop, the timing for these statements couldn't be worse. There is a real risk that a broad and aggressive regime could heighten recession fears and send risk assets into a downward spiral. However, political theater often leaves room to reassess positions, and a softer-than-expected introduction of new measures could give markets a brief respite.

Analysts at QCP Capital note that volatility indicators paint a mixed picture, with the VIX index remaining elevated at 22, reflecting continued unease in equity markets. At the same time, cryptocurrency volatility, contrary to the sell-off, is declining despite similar price declines and massive losses on Friday.

Activity before the opening of Asian markets had a bullish bias. Buyers bought options with upper boundaries ($85,000- $90,000 strikes) and sold lower boundary risks ($75,000 strikes), which can be interpreted as a bet on a more confident start to the second quarter.

This strategy allows traders to capitalize on Bitcoin's potential rise above $90,000 with protection against a fall below $75,000. Implementation requires access to the options market and an understanding of options pricing mechanisms.

Historically, April has been a seasonally strong month for cryptocurrencies, although analysts at QCP Capital remain cautious. Analysts predict the market is likely to move in a horizontal corridor while markets digest a host of macroeconomic risks and wait for clearer direction.

In addition to Trump's tariff announcement, other key macroeconomic events are expected to trigger additional volatility: