Bitcoin and the overall crypto market are expected to demonstrate a significant positive performance in the second quarter of 2024, as indicated by analysts at cryptocurrency exchange Coinbase. In recent weeks, Bitcoin has been making a market recovery, with a 3.31% gain in the past week, reaching a trading price above $43,000. This positive momentum has prompted the Coinbase analysts to believe that the factors that previously exerted downward pressure on Bitcoin are gradually diminishing. One notable development in this regard is the completion of the GBTC’s liquidation by defunct exchange FTX. Additionally, the recovery of certain crypto entities from bankruptcy signifies a shift in the dynamics of the Bitcoin market.
Another factor supporting the optimistic outlook for Bitcoin is the stable performance of the Bitcoin spot ETF market in the past week. The average daily net inflows of $200 million and a daily trading volume of $1.35 billion indicate a sustained interest in Bitcoin investment. However, Coinbase market experts predict that in the coming weeks, macroeconomic factors will play a more influential role in the crypto market.
Coinbase analysts specifically reference the US Federal Reserve’s decision to postpone the discussion on scaling back its quantitative tightening (QT) to the next Federal Open Market Committee (FOMC) meeting in March. This delay suggests that the easing cycle will commence on May 1, which typically involves measures like lowering interest rates to stimulate economic activity. Furthermore, the analysts anticipate that the Fed will cease its balance sheet reductions by June, providing further support to the US economy.
The analysts predict that in an election year, the Fed could implement an end to the balance sheet reduction concurrently with rate cuts. They anticipate a potential 100 basis points (bps) decrease in interest rates, which is 25 bps more than the Fed’s projected future rates, resulting in a 1% reduction overall. Lower interest rates generally benefit the digital asset ecosystem as it enables investors to obtain loans at cheaper rates, thereby allowing them to accumulate more funds for investment in risk assets such as cryptocurrencies.
Taking into account the factors mentioned above, combined with other “idiosyncratic” factors like the Bitcoin halving, Coinbase analysts predict that Bitcoin, along with other tokens, will serve as favorable additions to investment portfolios in the second quarter of 2024. These positive expectations for Bitcoin and the broader crypto market indicate a positive sentiment among industry experts.
At the time of writing, Bitcoin is trading at $43,077.76, reflecting a 0.20% gain in the past day. The daily trading volume has decreased by 15.45% and is currently valued at $16.78 billion. With a market capitalization of $844.85 billion, Bitcoin maintains its position as the largest cryptocurrency globally.
The Coinbase analysts’ positive outlook for Bitcoin and the entire crypto market in Q2 2024 is supported by various market factors. The recovery of Bitcoin, along with the completion of GBTC’s liquidations and the rebound of crypto entities from bankruptcy, indicates a shifting landscape. The stability of the Bitcoin spot ETF market further reinforces the positive sentiment. Moreover, the anticipated macroeconomic measures, such as rate cuts and the cessation of balance sheet reductions by the US Federal Reserve, are expected to stimulate economic activity and benefit the digital asset ecosystem. These factors, combined with unique considerations like the Bitcoin halving, contribute to the analysts’ prediction that Bitcoin and other cryptocurrencies will be attractive additions to investment portfolios in the second quarter of 2024. However, investors are advised to conduct thorough research and understand the associated risks before making any investment decisions in the crypto market.
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell, or hold any investments, and naturally, investing carries risks. Individuals are advised to undertake their own research and use the information provided on this website at their own risk.
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