Markets
Coinbase Institutional Expects Choppy Q3, Says Crypto Still Lacks Strong Narratives
Cryptocurrency investors should brace for further consolidation this quarter, according to the institutional arm of U.S. digital asset exchange Coinbase.
According to the new research According to Coinbase Institutional, cryptocurrency traders fear that the US economy could enter a recession.
However, Coinbase says that as long as the economy remains stable, there are bullish factors on the horizon.
“The concern is that cuts may not be bullish for markets if there is fear of a broader slowdown. That is, retail investors will likely be reluctant to enter new stock or crypto positions if the U.S. economy falls into recession.
On the other hand, if the economy continues to do relatively well and the Fed cuts, then that could unlock more liquidity and invite more participation from retail consumers.
Also, there is a US election in November, where fiscal expansion seems like a strong possibility, whoever wins. This is a strong incentive to buy Bitcoin as an alternative to the traditional financial system, in our opinion.”
Coinbase goes on to say that it is uncertain how traders will react to Ethereum’s approval in the short term (ETH) exchange-traded funds (ETFs). But the cryptocurrency exchange notes that the launch of Ethereum ETFs is long-term bullish for the leading altcoin.
Coinbase also says it expects cryptocurrency prices to fluctuate wildly over the next couple of months before establishing a clear trend.
“For now, we expect price action to remain choppy in Q3 2024, as crypto markets still lack solid narratives. For example, the market cannot decide whether potential ETH ETF spot flows (experts predict a launch quite soon) will be bullish or bearish, although we think this is not necessarily a bad thing from a positioning perspective.
This could leave room for unexpected performance and provide ETH with more support, although flows will take some time to materialize.
Overall, however, we believe the next couple of months will likely produce more volatility before things start to improve more seriously in late September.”
At the time of writing, Ethereum is trading at $3,205, up more than 2% from the previous day.
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