Analysts at Coinbase, a prominent cryptocurrency exchange, are optimistic about the future performance of Bitcoin and the overall crypto market in Q2 2024. This positive outlook comes as Bitcoin continues its market recovery, displaying a 3.31% gain in the past week, and surpassing the $43,000 mark.
The Coinbase weekly report, released on Friday, highlights the diminishing downward pressure on Bitcoin, as the market factors that previously induced this pressure are now phasing out. One notable development is the completion of GBTC’s liquidations by the now-defunct exchange, FTX. Additionally, certain crypto entities have also shown signs of recovery from bankruptcy. These indications suggest a significant change in the dynamics of the BTC market.
Furthermore, the report emphasizes the stable performance of the Bitcoin spot ETF market over the past week. The market has witnessed average daily net inflows of $200 million, alongside a daily trading volume of $1.35 billion. Such consistent performance reflects the growing confidence of investors in Bitcoin and contributes to the positive sentiment surrounding the crypto market.
Macroeconomic Factors and Federal Reserve’s Influence
Moving forward, Coinbase’s market experts predict that macroeconomic factors will exert more influence on the crypto market in the coming weeks. Specifically, they refer to the US Federal Reserve’s decision to postpone discussions on scaling back its quantitative tightening (QT) until the next Federal Open Market Committee (FOMC) meeting in March. This development is expected to initiate an easing cycle starting on May 1, an approach that typically involves measures like lowering interest rates to encourage economic activity.
Moreover, the analysts anticipate the Federal Reserve’s halt of balance sheet reductions by June, providing further support to the US economy. Interestingly, they speculate that the end of balance sheet reduction might coincide with rate cuts. As an election year typically prompts policymakers to implement “anodyne” policies, they predict that the apex bank will cut interest rates by 100 basis points, surpassing the Fed’s expectation for future rates. Such a rate cut of 1% is likely to stimulate the digital asset ecosystem, allowing investors to pay lower borrowing fees and allocate more funds to risk assets like cryptocurrencies.
Idiosyncratic Factors and Bitcoin Halving
The Coinbase analysts also take into account “idiosyncratic” factors, one of which is the highly anticipated Bitcoin halving event. This event, which occurs approximately every four years, reduces the amount of new Bitcoin created and earned by miners. Historically, Bitcoin halvings have been followed by significant price increases, making it a favorable time to invest in BTC and other crypto tokens.
Combining the aforementioned factors, Coinbase analysts predict that Bitcoin and other cryptocurrencies will serve as attractive portfolio additions in Q2 2024.
At the time of writing, Bitcoin is trading at $43,077.76, exhibiting a 0.20% gain in the last day. The daily trading volume has decreased by 15.45% and is valued at $16.78 billion. With a market capitalization of $844.85 billion, Bitcoin continues to hold its position as the largest cryptocurrency in the world.
It is important to note that the article is for educational purposes only and does not reflect the opinions of NewsBTC regarding any investment decisions. Investing in cryptocurrencies carries inherent risks, and readers are advised to conduct their own research before making any investment decisions. Any information provided in this article should be used at the reader’s own discretion and risk.