The analysts at cryptocurrency exchange Coinbase have expressed their confidence in the future performance of Bitcoin and the entire crypto market in the second quarter of 2024. This prediction comes at a time when Bitcoin is gradually recovering from recent market setbacks, with a 3.31% increase in the past week to trade above $43,000. The analysts highlight various market factors that have contributed to this positive outlook, including the completion of GBTC’s liquidations and the recovery of bankrupt crypto entities.
The Coinbase analysts emphasize that the downward pressure on Bitcoin is dissipating, signifying a shift in market dynamics. They point to the closure of GBTC’s liquidations, facilitated by defunct exchange FTX, as evidence of this change. Additionally, the recovery of certain crypto entities from bankruptcy further supports the argument that the market is evolving in a positive direction. These developments, combined with the stable performance of the Bitcoin spot ETF market, suggest a more optimistic future for Bitcoin and crypto as a whole.
In the coming weeks, Coinbase’s market experts anticipate macroeconomic factors to play a greater role in shaping the crypto market. 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 postponement suggests that the easing cycle will likely begin on May 1, involving measures such as lowering interest rates to stimulate economic activity. Furthermore, they predict that the Fed will halt its balance sheet reductions by June to provide further support to the US economy.
The analysts speculate that the Fed may combine the end of balance sheet reduction with rate cuts. They believe that in an election year, policymakers tend to implement “anodyne” policies, and expect the US apex bank to cut interest rates by 100 basis points (bps), which is 25 bps more than the Fed’s projected future rates. This potential reduction in interest rates is viewed as a positive development for the digital asset ecosystem, as it allows investors to borrow at lower fees and allocate more funds to risk assets like cryptocurrencies.
Considering the factors outlined above, along with other “idiosyncratic” factors such as the Bitcoin halving, the Coinbase analysts predict that Bitcoin and other cryptocurrencies will serve as favorable additions to investment portfolios in the second quarter of 2024. They believe that the combination of market improvements and supportive macroeconomic conditions will contribute to a positive performance for these digital assets.
As of now, Bitcoin is trading at $43,077.76, showing a 0.20% gain in the past day. However, the daily trading volume for Bitcoin has decreased by 15.45% and is currently valued at $16.78 billion. Despite this, Bitcoin remains the largest cryptocurrency in the world, with a market cap of $844.85 billion.
Source: BTCUSD chart on Tradingview.com
Please note that this article is provided for educational purposes only and does not represent the opinions of NewsBTC. It is important to conduct your own research and exercise caution before making any investment decisions. Investing in cryptocurrencies carries risks, and you should use the information provided here at your own risk.
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