Markets
BTC Summer 2024: Analysis of market trends and future drivers
Bitcoin is currently in a quiet period between two narratives. The excitement, speculation, and rapid pace of capital flows since the launch of ETFs have subsided. There is not much good news on the horizon, perhaps until the US elections in November. In the meantime, it seems that BTC is mainly facing crypto and macro headwinds.
In June, BTC nearly hit all-time highs before stronger-than-expected nonfarm payrolls data sent prices down to $58,000, despite weaker inflation figures. The start of the distribution of Mt. Gox’s $9 billion BTC and the German government’s sale of seized BTC saw BTC reach around $54,000, but it has now rebounded to $60,000. Once Mt. Gox’s distributions are completed over the next few months, this will eliminate a significant price risk. Despite these negative factors, BTC has shown resilience. The next potential catalyst is the approval of the ETH ETF. With less liquidity than BTC, strong inflows could push ETH higher, although an oversupply like BTC could occur.
On the political front, we’ve seen Donald Trump include positive comments about Bitcoin and digital assets in his regular campaign speeches, taking an America-first stance aimed at keeping jobs and wealth here in the United States. If Trump is re-elected, Bitcoin’s price should benefit (although the shape of the Trump administration’s digital asset policy is unclear). It’s possible we’ll also see some speculative buying as we approach Election Day – a positive narrative on the horizon.
Finally, we saw a number of major central banks cut rates in June, including Canada and the EU. One of the biggest correlates of BTC price is global. M2 LiquidityThese rate cuts suggest that the upward trend in global liquidity is moving in a beneficial direction.
In early June, BTC nearly hit all-time highs before tailwinds pushed it to the lows of the June range. Despite a lower-than-expected PPI, the market showed signs of buyer fatigue. Later, Mt. Gox announced BTC distributions to creditors in July, and the German government sold seized BTC, sending prices below $60,000. ETH remained more resilient but still down from its May ETF rally.
BTC currently lacks a clear narrative, with only negative events on the horizon, which does not give buyers much to rally around. On the other hand, ETH is anticipating its ETF launch date, which should generate market excitement due to its lower liquidity compared to BTC. Many are predicting the ETF’s S-1 approval by July, which could spark interest and demand. Investors will also be watching to see if altcoins and BTC rally alongside ETH.
On the political front, Trump continues to talk positively about BTC and cryptocurrencies in his campaign speeches while Biden remains largely silent on the issue. Later this month, BTC 2024 will be held in Nashville, with several politicians, including Donald Trump, in attendance. The venue would provide a fitting place for a candidate to announce major positions on the topic of digital assets.
Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.