Markets
The cryptocurrency market rollercoaster will persist
Based on the latest predictions from leading industry analysts, the cryptocurrency market appears to be ready for a wild ride In the next months.
Cryptocurrency volatility to persist through Q3
Despite the positive trend in the crypto market earlier this year, Q2 and Q3 2024 saw notable headwinds, fueled by the expected launch of spot Bitcoin ETFs. “Q3 started on a sour note,” says Coinbase’s head of institutional research, David Duong.
The market was heavily affected by oversupply created by indiscriminate bidding Selling Bitcoin from price-insensitive sources, most notably the German government’s Bundeskriminalamt (BKA), the cryptocurrency exchange said.
As the market lacks compelling narratives, Duong and his colleague David Han, an analyst at Coinbase, predict that price action will remain “choppy” throughout the third quarter of 2024. “For now, we expect price action to remain choppy in Q3 2024 as the crypto markets still lack strong narratives,” they said in a post on Friday.
As analysts focus on the final quarter of the year, their outlook is becoming more optimistic.
Possible Q4 recovery driven by macro factors
Looking further into the fourth quarter, Duong notes that potential interest rate cuts and the U.S. election in November could have a major impact on the market. While Coinbase cautions that if there are broader concerns about an economic slowdown, rate cuts may not always be positive; still, the 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 wildcard for the approach US Election in November is the possibility of fiscal expansion regardless of the outcome. Regardless of the election outcome, fiscal expansion could help Bitcoin position itself as a solid buy at current levels, especially as an alternative to conventional finance, experts propose.
JPMorgan analysts offer similarly upbeat outlook
Although on a different timescale, experts at JPMorgan mirrored Coinbase’s projection and also predicted a possible return for the cryptocurrency market. Although on a different date, JPMorgan analysts had a similarly optimistic view, stating that cryptocurrency markets could recover by August.
Approval of spot ETFs is seen as a positive thing
Latest legislative developments — SEC allowing spot ETH ETFs and receiving applications for SOL ETFs — offer an encouraging sign for the crypto sector. While experts are uncertain about the full effect on ETH prices, from a positioning perspective, they believe the outlook is unlikely to be bad.
This could set the stage for surprising performance and provide further support for ETH, even if inflows take time to materialize, Coinbase analysts say.
Featured image from Norris Inc., chart from TradingView