Markets
Cryptocurrency Markets Likely to Remain Choppy in Q3, Coinbase Analysts Say
Cryptocurrency price action is likely to continue on a choppy trajectory for the rest of Q3 2024, say analysts at cryptocurrency exchange Coinbase.
Coinbase’s head of institutional research David Duong and David Han, an analyst at the US-based cryptocurrency exchange, shared their prediction in the company’s weekly market report. They anticipate increased volatility for cryptocurrencies in the next month or two before a potential rally in the fourth quarter.
JPMorgan analysts offered a similarly bullish analysis, albeit with a different timeline, noting Cryptocurrency markets could recover in August.
The third quarter started on a sour note
The cryptocurrency market experienced a bullish trend earlier this year, driven by the Bitcoin spot ETF narrative, with Bitcoin reaching a new all-time high above $73,000.
However, Q2 saw broader market headwinds due to various headwinds including interest rate decisions, miner capitulation, and significant sell-offs by government-controlled wallets, extending into Q3.
“The third quarter started on a sour note, with supply gluts generated by the indiscriminate sale of bitcoins from price-insensitive sources. This includes the German government’s Bundeskriminalamt (BKA), which began selling its stash of seized bitcoins on June 19,” the analysts said in the commentary published on Friday.
Mt. Gox is another factor, and analysts say the uncertainty could be more damaging than the selloff itself.
“For now, we expect price action to remain choppy in 3Q24 as crypto markets still lack strong narratives,” they wrote.
Analysts have optimistic outlook for the fourth quarter
On a positive note, the SEC’s approval of spot ETH ETFs and recent SOL ETF applications are important developments. Despite market uncertainty about whether ETH ETF inflows will be bullish or bearish, Duong and Han believe the outlook is unlikely to be negative “from a positioning perspective.”
“This could leave room for surprising performance and provide further support for ETH, even if inflows take time to materialize. Overall, though, we believe the next two months are likely to produce more volatility before things start to improve more seriously in late September,” the two added.
Looking ahead to the fourth quarter, potential interest rate cuts and the US elections in November could significantly impact the market.
Fiscal expansion, regardless of the election outcome, could position Bitcoin as a strong buy at current levels, particularly as an alternative to traditional finance.