Bitcoin and cryptocurrencies have shown average or downward trends in Q2 and Q3 in recent years. With just one day left until the halving, mining Bitcoin will become more expensive, so miners may start selling Bitcoin.
In his X post, Elja gives his honest take on the current state of the cryptocurrency market, highlighting five key factors that could signal a drop in the price of Bitcoin and cryptocurrencies.
Let us dig deeper into these points to get a comprehensive understanding.
Why Bitcoin and Cryptocurrencies Could Fall in Q2 and Q3
BTFP program ended
Analysts start with the end of the Federal Reserve's emergency lending program, the Bank Term Funding Program (BTFP). After the collapse of Signature Bank and Silicon Valley Bank, new lending under BTFP was terminated, significantly reducing market liquidity. This decision may have a bearish effect in the short term, but the impact may be mitigated by the Federal Reserve's tendency to issue more money.
Delayed rate cut
Next, he discusses the prospect of interest rate cuts in a post on X, which is boosting the stock and crypto markets. Better than expected CPI data and Fed Chairman Powell's comments on long-term interest rates have dampened bull market hopes. However, the 2024 rate cut raises concerns, especially for risk-on assets.
ETF inflows slowing
Going forward, Elja noted that there has been a notable shift in cryptocurrency ETF flows, with the decline in institutional interest reflected in a slowdown in inflows. This trend is particularly evident in the Bitcoin ETF, where outflows have consistently outpaced inflows. This decline in institutional participation could signal weakening confidence in the market's prospects.
Uncertainty of the war situation
It's no secret that geopolitical tensions between Iran and Israel are ongoing, with many analysts seeing this as adding further uncertainty to the market. However, Elja emphasizes that markets can be highly volatile depending on what either party says or does. Recent market reactions to similar events have highlighted the importance of geopolitical factors in shaping investor sentiment.
Also Read: Will Cryptocurrencies Soar? Ripple CEO Reveals What's Next Ahead of Bitcoin Halving!
Bitcoin Historical Trends and the Impact of the Halving
Summarizing his analysis, Erja said Bitcoin and cryptocurrencies in general have been bearish on average from Q2 to Q3. With the halving approaching, miners may increase selling as mining costs rise. As with previous halving cycles in 2016 and 2020, it may take several months for these variables to settle in general.
In conclusion, the analyst advised investors to stay focused and be ready to buy on dips. He said that experienced crypto investors see this market stagnation or decline period as an opportunity to buy more assets at lower prices. They foresee significant growth in the future, with Bitcoin potentially hitting $150,000, Ethereum hitting $12,000, and many altcoins seeing 50x to 100x gains. Do you agree?
Read more: Bitcoin Price Rises Above Critical Support: Is it Time to Go Long BTC?
