US-based top exchange Coinbase believes that digital assets are just warming up for big rallies in the coming months.
In a new research report, Coinbase Institutional says the recent change in macroeconomic backdrop suggests Bitcoin (BTC) and crypto are poised for a fourth-quarter surge.
Coin base say the Fed and the People’s Bank of China (PBOC) are now pursuing looser monetary policies – conditions that have historically supported higher crypto prices.
“Looking ahead, we maintain a constructive outlook for Q4 24, which is largely based on our favorable view of the current macro environment, in addition to the idiosyncratic factors mentioned above.
For example, last week we argued that one of the key implications of the Fed’s decision to cut rates by 50 basis points is that it gives other monetary authorities cover to take more stimulative measures.
This was followed by China’s unveiling of a massive dual fiscal and monetary stimulus package, which includes a record-breaking interest rate cut, liquidity support for equities and a reduction in reserve requirements for banks – all in an effort to boost both lending and the existing loan costs. ”
The cryptocurrency exchange says that while the labor market is showing signs of weakening, the US economy remains resilient.
“Q2 2024 GDP figures exceeded expectations by 3.0% (vs. the average Bloomberg estimate of 2.9%). This confirms our view that the risk of a recession remains low in the short term.”
Coinbase also notes that crypto and the stock market have been moving together lately, indicating that Bitcoin and the rest of the digital asset market will follow the S&P 500’s march to new all-time highs.
“The correlation between crypto and stock markets has been high lately, approaching 50%, driven by global easing campaigns in the US and China… Overall, key metrics indicate a robust market. Financing rates are stable and open interest is at an almost average six-month level. Taken together, this suggests the market is well positioned to enter a generally good month for crypto, with BTC up eight of the past ten October.”
At the time of writing, Bitcoin is trading at $65,846.
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