Analysts at US cryptocurrency exchange Coinbase say easing downward pressure could create healthier market conditions for investors.
In a new analysis, Coinbase say that many factors dampening Bitcoin (BTC) and the broader digital asset sector – such as liquidations by bankrupt crypto exchange FTX and the financial troubles of crypto lender Celsius – are disappearing, paving the way for a better trading environment.
“Many technical factors that are putting pressure on Bitcoin specifically (and crypto more broadly) are starting to run out of steam in our view. This is evident from the liquidations at FTX (for example through the sale of their Grayscale Bitcoin Trust shares) and from the bankruptcy of some large defunct entities.
Net inflows into US spot Bitcoin ETFs (exchange traded funds) averaged over $200 million per day over the past week (bringing total net inflows since January 11 to $1.46 billion) with a healthy daily volume of ~$1 .35 billion.
We therefore expect macro factors to become more relevant to the digital asset class in the coming weeks, which could support performance. In the US, the chance of a soft landing seems greater than a few months ago, while the economy appears to be making only minimal trade-offs between activity and inflation.”
Additionally, Coinbase says it expects a combination of the Federal Reserve’s easing of tight monetary policy in May and the upcoming BTC halving in April will combine to create a positive environment for crypto assets in general.
Bitcoin halving occurs every four years, when miner rewards are halved.
“We expect US interest rate cuts to begin in May and quantitative tightening to unwind shortly thereafter, coinciding with idiosyncratic events such as the Bitcoin halving and creating a positive environment for the broader asset class.”
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