Cryptocurrency exchange analysts at Coinbase are backing Bitcoin and the entire cryptocurrency market to post significantly positive results in the second quarter of 2024. This development comes as BTC continues its market recovery, gaining 3.31% over the past week to trade above $43,000.
The pressure on Bitcoin is decreasing, macro factors are coming into play: analysts
In a weekly report from Coinbase on Friday, US exchange analysts noted that market factors that caused downward pressure on Bitcoin are gradually fading. This assertion is supported by the completion of the liquidation of GBTC by the defunct exchange FTX, as well as the recovery of some cryptocurrency companies from bankruptcy, indicating a change in the dynamics of the BTC market.
Additionally, analysts also highlighted the strong performance of the Bitcoin ETF spot market over the past week, marked by average daily net inflows of $200 million and daily trading volume of $1.35 billion last week. However, in the coming weeks, market experts at Coinbase predict that macroeconomic factors will gain greater influence in the cryptocurrency market.
In particular, analysts cited the US Federal Reserve's decision to delay discussions on tapering quantitative tightening (QT) until the next Federal Open Market Committee (FOMC) meeting in March. Based on this development, they forecast that the easing cycle will begin on May 1 and typically includes measures such as interest rate cuts to make borrowing cheaper and stimulate economic activity. They also expect the Fed to begin ending its balance sheet contraction by June to further support the US economy.
Interestingly, they believe the Fed could consider stopping its balance sheet contraction at the same time it cuts rates. Based on the “anodic” policies that politicians are implementing in an election year, Coinbase analysts predict that the main US bank will cut interest rates by 100 basis points (bps) to 25 bps. p. more than the Fed's expectations for future rates – which is equivalent to a 1% rate cut.
Overall, falling interest rates bode well for the digital asset ecosystem as it allows investors to pay low borrowing fees while accumulating more funds to invest in risky assets such as cryptocurrency tokens. Based on a variety of the factors listed above, combined with “peculiar” factors such as the Bitcoin halving, Coinbae analysts predict that BTC, along with other tokens, will serve as a favorable portfolio addition in the second quarter of 2024.
Bitcoin Price Review
At the time of writing, Bitcoin is trading at $43,077.76, up 0.20% over the past day. Meanwhile, the asset's daily trading volume decreased by 15.45% and is valued at $16.78 billion. With a market capitalization of $844.85 billion, BTC continues to be considered the largest cryptocurrency in the world.
BTC is trading at $43,048 on the daily chart |Source: BTCUSD chart on Tradingview.com.