Analysts at cryptocurrency exchange Coinbase expect Bitcoin and the entire crypto market to achieve significantly positive performance in the second quarter of 2024. This development comes as BTC continues its market rally, gaining 3.31% over the last week to trade above $43,000.
Downward pressure on Bitcoin eases, macro factors come into play: Analysts
In Coinbase's weekly report on Friday, analysts at the American stock exchange noted that the market factors that triggered downward pressure on Bitcoin were gradually dissipating. This claim is supported by the completion of GBTC liquidations by the defunct exchange FTX as well as the recovery of certain crypto companies from bankruptcy, indicating a change in the dynamics of the BTC market.
In addition, analysts also highlighted the stable performance of the Bitcoin spot ETF market over the past week, represented by average daily net inflows of $200 million and a daily trading volume of $1.35 billion over the past week was marked. However, the market experts at Coinbase assume that macroeconomic factors will have a greater influence on the crypto market in the coming weeks.
In particular, analysts pointed to the US Federal Reserve's decision to postpone discussions on tapering its quantitative tightening (QT) until the next meeting of the Federal Open Market Committee (FOMC) in March. Based on this development, they predict that the easing cycle will begin on May 1, which typically includes measures such as interest rate cuts to make credit cheaper and stimulate economic activity. Additionally, they expect the Fed to begin halting its balance sheet cuts in June to further support the US economy.
Interestingly, they believe that the Fed may consider implementing the end of balance sheet reduction at the same time as interest rate cuts. Based on the “anodyne” policies that policymakers are implementing in an election year, Coinbase analysts predict that the U.S. top bank will cut interest rates by 100 basis points (bps) – 25 bps more than the Fed expects for future interest rates – which corresponds to a rate cut of 100 basis points (bps) 1%.
In general, a reduction in interest rates is a positive omen for the digital asset ecosystem as it allows investors to pay low borrowing fees and accumulate more funds to invest in risky assets such as crypto tokens. Based on the numerous factors listed above, combined with “idiosyncratic” factors such as the Bitcoin halving, Coinbae analysts predict that BTC will serve as a favorable portfolio addition alongside other tokens in the second quarter of 2024.
Bitcoin price overview
At the time of writing, Bitcoin is trading at $43,077.76, up 0.20% in the last day. Meanwhile, the asset's daily trading volume has fallen by 15.45% and is valued at $16.78 billion. With a market capitalization of $844.85 billion, BTC continues to be considered the largest cryptocurrency in the world.
BTC is trading at $43,048 on the daily chart | Source: BTCUSD chart on Tradingview.com
Featured image from CNBC, chart from TradingView
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