Based on the latest forecasts from leading industry analysts, the cryptocurrency market seems set for a wild ride in the next few months.
Cryptocurrency volatility to continue into Q3
Driven by the anticipated launch of a spot Bitcoin ETF, despite the positive cryptocurrency market momentum earlier this year, Q2 and Q3 2024 have seen significant headwinds. “Q3 started on a sour note,” says Coinbase head of institutional research David Duong.
The cryptocurrency exchange said the market was largely affected by an excess supply caused by uncontrolled selling of bitcoins from price-independent sources, most notably the German Bundeskriminalamt (BKA).
With the market lacking compelling narratives, Duong and his colleague David Han, an analyst at Coinbase, predict that price action will remain “volatile” throughout Q3 2024. “For now, we expect price action to remain volatile in Q3 2024 as cryptocurrency markets continue to lack strong narratives,” they said in a tardy Friday post.
The more analysts focus on the last quarter of the year, the more hopeful their outlook becomes.
Potential rebound in Q4 driven by macroeconomic factors
Looking further into the fourth quarter, Duong notes that possible rate cuts and the U.S. election in November could have a huge impact on the market. While Coinbase cautions that if there are broader concerns about an economic slowdown, a rate cut may not always be positive; the analysts nonetheless believe that if the economy remains sturdy enough, rate cuts could “unlock more liquidity and attract retail participation.”
As of today, the market cap of cryptocurrencies hit $2.11 trillion. Chart: TradingView.com
Another wild card in the upcoming US election in November is the possibility of fiscal expansion regardless of the outcome. Regardless of the election outcome, fiscal expansion could lend a hand position Bitcoin as a solid buy at current levels, especially as an alternative to conventional finance, experts suggest.
JPMorgan analysts offer similar bullish outlook
Albeit on a different timescale, experts at JPMorgan echoed Coinbase’s forecast and also predicted a possible cryptocurrency market comeback. Albeit on a different date, JPMorgan analysts had a similarly hopeful view, stating that cryptocurrency markets could rebound in August.
Spot ETF approval seen as positive
The latest legislative changes — the SEC allowing a spot ETH ETF and accepting applications for a SOL ETF — offer one encouraging sign for the cryptocurrency sector. While experts are not certain about the overall impact on ETH prices, from a positioning perspective, they believe the outlook is unlikely to be bad.
Coinbase analysts say this could create room for outperformance surprises and provide ETH with more support, even if flows take some time to materialize.
Featured image from Norris Inc., Chart from TradingView
