Based on the latest forecasts from top industry analysts, the crypto market looks set to Ready for a road trip Over the next few months.
Cryptocurrency volatility expected to continue in Q3
Despite the positive trend in the crypto market earlier this year, the second and third quarters of 2024 saw significant headwinds, driven by the expected launch of spot Bitcoin ETFs. “Q3 started on a sour note,” says David Duong, head of institutional research at Coinbase.
The cryptocurrency exchange said the market was heavily affected by oversupply caused by indiscriminate selling of Bitcoin from non-price-sensitive sources, particularly the German government’s Federal Criminal Office (BKA).
With the market lacking compelling narratives, Duong and fellow Coinbase analyst David Han expect price action to remain “volatile” throughout the third quarter of 2024. “For now, we expect price action to remain volatile in Q3 2024 as crypto markets still lack strong narratives,” they wrote in a post late Friday.
As analysts focus on the fourth quarter of the year, their expectations become more optimistic.
Possible recovery in Q4 driven by macroeconomic factors
Looking ahead to Q4, Duong notes that a potential rate cut and the US election in November could have a significant impact on the market. While Coinbase cautions that if there are more general concerns about an economic slowdown, a rate cut may not always be a positive, analysts believe that if the economy remains relatively strong, a rate cut could “open up more liquidity and attract retail participation.”
As of today, the market cap of cryptocurrencies hit $2.11 trillion. Chart: TradingView.com
Another unexpected factor in the approaching US elections in November is the potential for financial expansion regardless of the outcome. Regardless of the outcome of the election, financial expansion could help put Bitcoin in a strong buy position at current levels, especially as an alternative to traditional finance, experts suggest.
JPMorgan analysts offer similar bullish forecasts.
Despite the timeline difference, experts at JPMorgan agree with Coinbase’s predictions and also predict a possible return of the crypto market. Despite the difference in timing, JPMorgan analysts had a similarly optimistic view that the crypto markets could recover in August.
Approval of spot ETFs seen as positive
Recent regulatory developments — the SEC’s approval of spot Ethereum ETFs and the filing of SOL ETFs — are encouraging signs for the cryptocurrency sector. While experts are unsure of the full impact on Ethereum prices, from a positioning perspective, they believe the speculation is unlikely to be bad.
Coinbase analysts say this could leave room for a surprise outperformance and provide further support for ETH, even if the inflows take time to materialize.
Featured image by Norris Inc., chart by TradingView