Analysts at cryptocurrency exchange Coinbase are backing Bitcoin and the entire crypto market to post a significantly positive performance in the second quarter of 2024. This development comes as BTC continues its market recovery, rising 3.31% over the past week to trade above $43,000.
The downward pressure on Bitcoin is decreasing, macro factors are coming into play: analysts
In the Coinbase weekly report on FridayUS stock market analysts noted that the market factors that caused downward pressure on Bitcoin were gradually eliminated. This claim is supported by the completion of GBTC liquidations by the defunct exchange FTX and the recovery of certain crypto entities from bankruptcy, indicating a change in the dynamics of the BTC market.
Moreover, the analysts also highlighted the stable performance of the Bitcoin spot ETF market over the past week, characterized by an average daily net inflow of $200 million and a daily trading volume of $1.35 billion over the past week. However, in the coming weeks, Coinbase market experts have predicted that macroeconomic factors will gain more influence on the crypto market.
In particular, the analysts pointed to the US Federal Reserve’s decision to postpone deliberation on scaling back 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 involves measures such as cutting interest rates to make borrowing cheaper and stimulate economic activity. Moreover, they expect the Fed to begin halting balance sheet reductions by June to further support the US economy.
Interestingly, they believe the Fed could consider ending balance sheet reduction at the same time as rate cuts. Based on the “anodyne” policies that policymakers are implementing in an election year, Coinbase analysts predict that America’s top bank will cut rates by 100 basis points (bps) – 25 basis points more than the Fed’s expectation for future interest rates – which equates to lowering interest rates by 100 basis points (bps). 1%.
Overall, a reduction in interest rates bodes well for the digital asset ecosystem as it allows investors to pay low borrowing costs, thereby raising more money to invest in risky assets like crypto tokens. Based on the multiple factors listed above, combined with “idiosyncratic” factors such as Bitcoin’s halving, Coinbae’s analysts predict that BTC, among other tokens, will serve as favorable portfolio additions in the second quarter of 2024.
Bitcoin price overview
At the time of writing, Bitcoin is trading at $43,077.76 with a gain of 0.20% on the last day. Meanwhile, the asset’s daily trading volume is down 15.45% and is valued at $16.78 billion. With a market capitalization of $844.85 billion, BTC remains the largest cryptocurrency in the world.
BTC 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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