Expert analysts at the prominent cryptocurrency exchange Coinbase have placed their confidence in Bitcoin and the broader crypto market for an exemplary performance in the second quarter of 2024. This optimism is fueled by Bitcoin’s continued resurgence, which has seen a 3.31% rise over the past week, allowing the digital currency to ascend beyond the $43,000 mark.
The fading bearish sentiment encircling Bitcoin points to a turnaround in market fortunes, according to the recent weekly report from Coinbase. Analysts at the exchange have observed critical indicators suggesting a dissipation of the negative factors previously weighing down on Bitcoin’s value. Notably, the completion of the GBTC’s liquidations by the now-defunct FTX exchange and the emergence of various crypto entities from bankruptcy proceedings signal a transformative period for Bitcoin’s market dynamics.
Adding credence to a brighter outlook is the steady performance of Bitcoin’s spot ETF market, with the past week witnessing a consistent daily net inflow averaging $200 million and a daily trading volume reaching $1.35 billion. Despite this, Coinbase industry specialists foresee macroeconomic elements asserting a stronger influence on the crypto market’s trajectory in the subsequent weeks.
A significant pivot point is the US Federal Reserve’s recent decision to carry over discussions on tempering its quantitative tightening strategy to the forthcoming Federal Open Market Committee meeting in March. Interpreting this move, analysts project the onset of the easing cycle to commence on May 1, typified by strategies such as lowering interest rates to render borrowing costs more attractive, thereby stimulating economic activity. The anticipation also extends to a halt in balance sheet tapering by June to bolster the US economic landscape.
Coinbase analysts proffer that the Federal Reserve might sync the cessation of balance sheet reduction with interest rate deductions. Considering policymakers’ tendency toward less stringent policies during an election year, Coinbase’s experts speculate on a rate cut that surpasses the Federal Reserve’s projections by 25 basis points – amounting to a 1% rate reduction.
The prospect of reduced interest rates traditionally bodes well for the digital asset domain, furnishing investors with the allure of minimal borrowing expenses. This, in turn, frees up capital for investment in higher-risk holdings, such as cryptocurrencies. Reflecting on a comprehensive analysis that encompasses distinctive factors like the upcoming Bitcoin halving, Coinbase analysts contend that Bitcoin and various other digital tokens will likely present attractive portfolio inclusions for Q2 2024.
Regarding Bitcoin’s current market position, the cryptocurrency commands a trading value of $43,077.76, noting a slight 0.20% uptick on the day. Nevertheless, its daily trading volume has receded by 15.45%, standing at $16.78 billion. With its market capitalization planted at $844.85 billion, Bitcoin steadfastly maintains its dominance as the world’s leading cryptocurrency.
