Analysts at cryptocurrency exchange Coinbase say cryptocurrency price action is likely to continue on a volatile path for the rest of Q3 2024.
Coinbase’s head of institutional research David Duong and David Han, an analyst at the U.S.-based cryptocurrency exchange, Share your predictions In the company’s weekly market report, they expect greater volatility for cryptocurrencies over the next month or two before a potential rally in the fourth quarter.
JPMorgan analysts offered a similarly bullish analysis, albeit with a different timeline, suggesting that crypto markets could rebound in August.
The third quarter started on a sour note.
The cryptocurrency market saw an uptrend earlier this year, driven by the Bitcoin ETF narrative, as Bitcoin hit a new all-time high above $73,000.
However, the second quarter saw broader market struggles due to multiple headwinds, including interest rate decisions, capitulations by mining companies, and heavy selling by government-controlled portfolios, which extended into the third quarter.
“The third quarter started on a sour note with the oversupply resulting from the indiscriminate selling of Bitcoin from non-price-sensitive sources. This includes the German Federal Diabetes Office (BKA), which began selling its confiscated Bitcoin supply on June 19,” the analysts said in a commentary published on Friday.
Mt. Gox is another factor, and analysts say the uncertainty could be more damaging than the actual sale.
“For now, we expect price action to remain volatile in Q3 2024, as crypto markets still lack a strong narrative,” they wrote.
Analysts have a bullish view on the fourth quarter.
On a positive note, the recent SEC approval of Ethereum-based ETFs and Ethereum-based ETF applications are major developments. Despite the market uncertainty over whether Ethereum-based ETF flows will be bullish or bearish, Duong and Han believe the outlook is unlikely to be negative “from a positioning perspective.”
“This could leave room for a surprise outperformance and provide ETH with further support, even if the inflows take some time to materialize. However, we believe the next couple of months are likely to produce more volatility before things start to improve in more seriousness in late September,” the pair added.
Looking ahead to Q4, potential interest rate cuts and the US election in November could weigh heavily on the market.
Financial expansion, regardless of the election results, could put Bitcoin in a strong buy position at current levels, especially as an alternative to traditional finance.