Coinbase Research predicted on Friday that the crypto market will be turbulent in the third quarter of 2024, citing a lack of a strong narrative and economic uncertainty as the main drivers of the expected volatility.
of report It highlights that the cryptocurrency market is grappling with conflicting signals, especially regarding the potential impact of spot Ethereum ETF flows.
“The market cannot determine whether potential spot ETH ETF inflows will be bullish or bearish,” the analysts wrote.
The uncertain outlook for the U.S. economy adds complexity to the market, and the report suggests that retail investors may be hesitant to take on new positions in stocks and cryptocurrencies if economic conditions worsen.
“If the U.S. economy were to fall into recession, retail investors would likely be reluctant to take on new stock and cryptocurrency positions,” the team warned.
The start of the third quarter was already difficult, with the report noting that “Q3 got off to a rocky start as indiscriminate bitcoin selling from price-insensitive sources created an oversupply.”
Specifically, the German government’s Federal Criminal Office (BKA) Selling seized bitcoinsDespite not having a high trading volume, it is disrupting the market due to its promiscuous nature.
But there may be a glimmer of hope in the future.
“BKA may have almost seen the end after reducing its holdings,” the report said. “This means, in our view, some of these market distortions should be resolved soon.”
Analysts also cited the ongoing Mt. Gox repayments, suggesting that the uncertainty surrounding these repayments may be having a more negative impact on market sentiment than actual selling pressure.
Looking ahead, the report offered a nuanced view of the economic situation.
While acknowledging signs of an economic slowdown, the Coinbase team maintains an optimistic long-term outlook, stating: “We hold the contrarian view that productivity gains from accelerated technology adoption (including but not limited to generative artificial intelligence models) in a post-pandemic world will trigger a new multi-year economic cycle that could begin as early as Q4’24.”
However, the near future remains uncertain.
“For now, the cryptocurrency market remains lacking strong momentum, so we expect price activity to remain volatile in the third quarter of 2024,” the report said, suggesting that the next two months could see further volatility but that things could improve in late September.
Editor: Ryan Ozawa.
