Analysts at cryptocurrency exchange Coinbase say cryptocurrency price movements are likely to continue on a volatile trajectory for the remainder of the third quarter of 2024.
David Duong, head of institutional research at Coinbase, and David Hung, an analyst at the U.S.-based crypto exchange, made the predictions in the firm's weekly market report. They expect to see more volatility in cryptocurrencies over the next month or two before a possible upturn in the fourth quarter.
Analysts at JPMorgan offered a similar bullish analysis, albeit on a different timeline, noting that the cryptocurrency market could recover in August.
A shaky start to the third quarter
Earlier this year, the cryptocurrency market entered a bullish trend driven by talk of a spot Bitcoin ETF, sending Bitcoin to an all-time high of over $73,000.
However, multiple headwinds in Q2, including interest rate decisions, miner capitulations, and a significant sell-off by government-controlled wallets, caused the overall market to struggle through Q3.
“The third quarter got off to a poor start as a supply glut was created by indiscriminate bitcoin sales from price-indifferent sources, including the German government's Federal Criminal Office (BKA), which began selling its seized bitcoin supply on June 19,” the analysts said in a commentary published on Friday.
Mt Gox is another factor, with analysts saying the uncertainty could do more damage than the actual sell-off.
“For now, the crypto market still lacks a strong narrative, so we expect price activity to remain volatile in Q3 2024,” they wrote.
Analysts have bullish outlook for Q4
On the bright side, the SEC’s approval of the Spot ETH ETF and the recent SOL ETF filing are important developments. Despite market uncertainty about whether ETH ETF flows will be bullish or bearish, Duong and Han believe the outlook is unlikely to worsen “from a positioning standpoint.”
“This could create some room for surprise outperformance and provide further support for ETH, even if inflows take longer to materialize. Overall, however, we believe we are likely to see more volatility over the next two months until conditions start to improve more substantially in late September,” they added.
Looking ahead to the fourth quarter, potential interest rate cuts and the US presidential election in November could have a major impact on markets.
Regardless of the election outcome, fiscal expansion could provide a strong buying opportunity for Bitcoin at current levels, especially as an alternative to traditional finance.
