Markets
Coinbase Institutional predicts eventful third quarter, says cryptocurrencies still lack strong narratives
The institutional arm of U.S. digital asset exchange Coinbase says cryptocurrency investors should brace for more consolidation this quarter.
According to the news research Cryptocurrency traders are concerned about the possibility of the US economy entering a recession, according to Coinbase Institutional.
However, Coinbase says bullish catalysts are on the horizon as long as the economy remains stable.
“The concern is that declines may not necessarily be positive for markets if there are fears of a deeper slowdown. In other words, retail investors will likely be reluctant to open new positions in stocks or cryptocurrencies if the US economy falls into recession.
On the other hand, if the economy is still doing relatively well and the Fed cuts rates, that could unlock more liquidity and invite greater participation from individuals.
“Plus, we have a US election in November, and fiscal expansion seems like a strong possibility regardless of who wins. This is a strong incentive to buy Bitcoin as an alternative to the traditional financial system, in our view.”
Coinbase goes on to say that it is uncertain how traders will react to Ethereum’s approval in the short term (ETH) exchange-traded funds (ETFs). But the cryptocurrency exchange notes that the launch of Ethereum ETFs is long-term bullish for the leading altcoin.
Coinbase also says it expects cryptocurrencies to begin experiencing sharp price swings over the next two months before establishing a clear trend.
“For now, we expect price action to remain choppy in Q3 2024 as crypto markets still lack strong narratives. For example, the market cannot decide whether potential ETH spot ETF inflows (a launch is expected by experts quite soon) will be bullish or bearish, although we believe this is not necessarily a bad thing from a positioning perspective.
This could leave room for surprise outperformance and provide ETH with further support, even if flows take time to materialize.
Overall, however, we believe that the next two months should produce more volatility before things start to improve more seriously in late September.
At the time of writing, Ethereum is trading at $3,205, an increase of more than 2% over the past day.
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