Crypto Market Shifts to Risk-On Mode as War Risks Ease

QCP Capital, a prominent player in the crypto market, has recently analyzed a significant shift in market dynamics, indicating a move towards a risk-on mode. This shift is attributed to the easing of war risks, which has led to a reduction in market panic and an increase in tactical risk-taking. The Crypto Fear & Greed Index has shown a decrease in market anxiety, reflecting improved sentiment and technical indicators that point towards potential growth in major cryptocurrencies like Bitcoin and Ethereum.

Regulatory changes have also played a crucial role in this shift. The Federal Reserve's withdrawal of crypto-related bank guidance and the passage of the GENIUS Act by the U.S. Senate have created a more favorable environment for the crypto sector. These changes have boosted confidence in stablecoins and increased risk appetite among investors. Darius Sit, the founding partner of QCP Capital, noted that there is a clear shift towards more tactical investments, moving away from fear-driven selling.

Crypto assets like Bitcoin and Ethereum have shown resilience despite geopolitical tensions, with prices stabilizing due to waning panic. Institutional purchasing has highlighted positive treasury activity, indicating sustained demand for these assets. The Federal Reserve's policy changes and congressional actions have further enhanced the outlook for stablecoins and risk assets, with QCP analysts signaling a moderation in volatility as traders adjust their protective measures.

According to Darius Sit, the options skew has flattened, volatility has normalized, and protective puts are being layered in—not overhedged—suggesting that the market is transitioning from outright fear to tactical risk-taking. This shift is supported by historical trends, where reduced geopolitical fears have led to increased risk-taking in the crypto sector, driving momentum for digital assets and broader DeFi markets. Arthur Hayes, a prominent figure in the crypto industry, suggests that if current dynamics persist, the market could reach new highs.