Markets
The cryptocurrency market roller coaster will continue
Based on the latest forecasts from leading industry analysts, the cryptocurrency market seems to be ready for a wild ride in the next months.
Cryptocurrency Volatility to Persist in Q3
Driven by the planned introduction of spot Bitcoin ETFs, despite the positive trend in the cryptocurrency market earlier this year, Q2 and Q3 2024 have seen significant headwinds. “Q3 started on a sour note,” says Coinbase’s head of institutional research, David Duong.
The market has been strongly influenced by the oversupply created by an indiscriminate distribution Selling Bitcoin from sources independent of the price, in particular the German government’s Bundeskriminalamt (BKA), the cryptocurrency exchange said.
As the market lacks compelling narratives, Duong and fellow Coinbase analyst David Han predict that price action will remain “choppy” through Q3 2024. “For now, we expect price action to remain choppy in Q3 2024 as crypto markets lack strong narratives yet,” they said in a blog post Friday evening.
As analysts focus on the final quarter of the year, their outlook becomes more optimistic.
Potential fourth-quarter rebound driven by macroeconomic factors
Looking ahead to the fourth quarter, Duong notes that potential interest rate drops and the U.S. elections in November could have a major impact on the market. While Coinbase cautions that if there are broader concerns about an economic downturn, rate cuts may not always be a positive; however, analysts think that if the economy remains fairly strong, rate cuts could “unlock more liquidity and attract retail participation.”
As of today, the market cap of cryptocurrencies hit $2.11 trillion. Chart: TradingView.com
Another wild card for the upcoming US elections in November is the possibility of a fiscal expansion independent of the outcome. Regardless of the outcome of the election, fiscal expansion could help position Bitcoin as a solid buy at current levels, especially as an alternative to conventional finance, experts propose.
JPMorgan analysts offer a similar bullish outlook
Although on a different timescale, JPMorgan experts mirror Coinbase’s projection and also predict a possible comeback for the cryptocurrency market. Although on a different date, JPMorgan analysts had a similarly optimistic view stating that cryptocurrency markets could recover in August.
Spot ETF approval seen as a positive thing
Latest Legislative Developments: SEC Allows Spot Payment ETF ETH and the gaining of applications for SOL ETFs, offer an encouraging indication for the cryptocurrency sector. While experts are unsure of the overall effect on ETH prices, from a positioning perspective they think the prognosis is unlikely to be negative.
This could leave room for unexpected performance and offer ETH more support, although flows will take time to materialize, Coinbase analysts say.
Featured image from Norris Inc., chart from TradingView