Bitcoin prices fell nearly 15% in Q2, and altcoins dropped even more.
A strong start to 2024 had bulls predicting bitcoin (BTC) would hit $100,000 at some point this year, but relentless selling pressure in April and June (interrupted by a rally in May) left prices struggling to stay above $60,000 as the quarter drew to a close.
Entering the second quarter, bitcoin traded near $71,000, and at the time of reporting (about 60 hours before Q2 officially ended), prices had changed hands at $60,800, down more than 14%. Thanks to momentum from what now seems like a certain approval of a spot ETF, ether (ETH) performed better but was still down about 5% in the second quarter.
Dragged down by even larger declines in many altcoins, the broader CoinDesk index fell more than 21% over the past three months. Among the movers, Solana (SOL) dropped 30%, Ripple (XRP) fell 23%, and Dogecoin (DOGE) plunged 42%. The best performer in the index was the aforementioned ether, down 5%.
Positive Catalysts Disappear ❌
Currently, Bitcoin’s disappointing price action in Q2 can be seen as a correction within a larger bull run, which saw the coin increase nearly fivefold from its January 2023 lows to a new all-time high above $73,500 in mid-March this year.
Expectations of a spot bitcoin ETF approval, followed by approval and then massive inflows into the new funds, were certainly the main catalyst for the rise. There were also macro factors – specifically, predictions of a series of significant rate cuts in 2024 from the U.S. Federal Reserve. However, inflation has not cooperated, and so far, U.S. monetary policy has not eased, with more than one central bank member now not expecting even a single rate cut this year.
With ETF inflows becoming stale and occasionally reversing into outflows, along with hopes for lower rates diminishing by the day, buyers seem to be sitting on the sidelines until a new catalyst emerges.
More Pain Ahead in Q3? 🤔
Markus Thielen at 10X Research writes: Bitcoin entered a downtrend on June 20, listing 10 reasons why prices could drop to $55,000 soon. Thielen notes that many trend-following funds are looking at the same signals and may be inclined to invest in short positions.
Additionally, while some bulls might be excited about the presidential debate seemingly favoring Donald Trump – who has recently emerged as a supporter of cryptocurrencies and Bitcoin – Thielen argues that President Biden’s poor performance has increased the chances of a replacement Democratic candidate, who could be a much more formidable opponent in the November election.
Thielen also reminds us of seasonality. Historically, Q3 has been the weakest quarter, with average returns of just 5% over the past 13 years. This compares to average returns of over 60% in both Q2 and Q4.
