Cryptocurrency exchange Coinbase has recently released a comprehensive report predicting a significantly positive performance for Bitcoin and the overall crypto market in the second quarter of 2024. This optimistic outlook comes as Bitcoin continues its market recovery, with a 3.31% gain in the past week, reaching a trading price above $43,000.
In their weekly report, Coinbase’s analysts emphasized that the market factors that previously exerted downward pressure on Bitcoin are gradually fading away. The completion of GBTC’s liquidations by defunct exchange FTX, along with the recovery of certain crypto entities from bankruptcy, indicate a shift in the dynamics of the BTC market.
Another point highlighted in the report is the stable performance of the Bitcoin spot ETF market. In the last week, there have been average daily net inflows of $200 million and a daily trading volume of $1.35 billion. These indicators suggest a growing confidence in Bitcoin among institutional investors.
Despite the positive trends in the cryptocurrency market, Coinbase’s market experts anticipate that macroeconomic factors will begin to exert more influence in the coming weeks. They specifically refer to the US Federal Reserve’s decision to postpone the deliberation on scaling back its quantitative tightening (QT) until the next Federal Open Market Committee (FOMC) meeting in March.
Based on this development, the analysts predict that the easing cycle will commence on May 1st. This typically involves measures such as lowering interest rates to stimulate economic activity and make loans cheaper. Additionally, they expect the Fed to halt its balance sheet reductions by June, further supporting the US economy.
Interestingly, Coinbase analysts believe that the Fed may implement the end of balance sheet reduction simultaneously with rate cuts. In an election year, policymakers often tend to implement “anodyne” policies, which is why they predict a 100 basis point (bps) interest rate cut by the US apex bank. This projection is 25bps higher than the Fed’s expectation for future rates, equivalent to a 1% rate reduction.
A reduction in interest rates generally bodes well for the digital asset ecosystem. Lower borrowing fees enable investors to accumulate more funds for investment in risk assets, such as crypto tokens. When combined with other factors, including Bitcoin halving and various idiosyncratic aspects, the analysts at Coinbase predict that BTC, along with other tokens, will serve as favorable portfolio additions in Q2 2024.
As of now, Bitcoin is trading at $43,077.76, reflecting a 0.20% gain in the past day. The asset’s daily trading volume is down by 15.45% and is currently valued at $16.78 billion. With a market cap of $844.85 billion, BTC maintains its position as the largest cryptocurrency in the world.
It is worth noting that the opinions expressed in this article are those of Coinbase’s analysts and should not be considered as investment advice. Before making any investment decisions, it is recommended to conduct thorough research and analysis. Investing in cryptocurrencies carries inherent risks, and individuals should exercise caution and make informed decisions.
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell, or hold any investments. Naturally, investing carries risks, and individuals are advised to conduct their own research before making any investment decisions. The information provided on this website should be used entirely at your own risk.
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