Markets
Cryptocurrency markets likely to remain volatile in third quarter, Coinbase analysts say
Cryptocurrency price action is likely to continue on a choppy trajectory for the remainder of the third quarter of 2024, according to analysts at cryptocurrency exchange Coinbase.
David Duong, head of institutional research at Coinbase, and David Han, an analyst at the U.S.-based crypto exchange, shared their predictions in the company’s weekly market report. They anticipate greater volatility in cryptocurrencies over the next two months before a potential rally in the fourth quarter.
JPMorgan analysts offered a similar bullish analysis, albeit with a different time frame, noting Cryptocurrency markets could rebound in August.
The third quarter started on a bitter note
The cryptocurrency market saw a bullish trend earlier this year, driven by the Bitcoin ETF spot narrative, with Bitcoin hitting a new all-time high above $73,000.
However, the second quarter was marked by broader market headwinds due to multiple headwinds, including interest rate decisions, miner capitulation and significant selling of government-controlled portfolios, which extended into the third quarter.
“The third quarter started on a sour note with oversupply generated by indiscriminate sales of bitcoin from price-insensitive sources. This includes the Bundeskriminalamt (BKA), the German government office, which began selling its stock of seized bitcoin on June 19,” the analysts said in the commentary published Friday.
Mt. Gox is another factor, and analysts say the uncertainty could be more damaging than the actual selling.
“For now, we expect price action to remain choppy in Q3 2024 as cryptocurrency markets continue to lack strong narratives,” they wrote.
Analysts have an optimistic outlook for the fourth quarter
On a positive note, the SEC’s approval of ETH spot ETFs and the recent SOL ETF applications are key developments. Despite market uncertainty over whether ETH ETF flows will be bullish or bearish, Duong and Han believe the outlook should not be negative “from a positioning perspective.”
“This could leave room for a surprise outperformance and provide ETH with further support, even if flows take time to materialize. Overall, however, we believe the next two months should produce more volatility before things start to improve more seriously in late September,” the two analysts added.
As we approach the fourth quarter, potential interest rate cuts and the US elections in November could have a significant impact on the market.
Fiscal expansion, regardless of the election outcome, could position Bitcoin as a strong buy at current levels, especially as an alternative to traditional finance.