The institutional arm of U.S. cryptocurrency exchange Coinbase believes the market is likely to see more volatility over the next two months as cryptocurrencies still lack a strong narrative.
Coinbase said in its weekly market commentary published on Friday (12th) that more and more reports have expressed concerns that the United States may fall into a recession later this year or early 2025, and macro data has provided a lot of evidence. Showing that the U.S. economy has slowed down (ISM manufacturing index, unemployment rate, domestic demand, etc.), "we believe the economy is likely to reach its peak in the second quarter of 2024."
However, Coinbase believes bullish catalysts will emerge as long as the economy remains stable. Its report reads:
“The concern is that a rate cut may not be beneficial to the market if markets fear a more severe economic slowdown. That is, if the U.S. economy slips into recession, retail investors may be reluctant to commit new stock or cryptocurrency positions. On the other hand, if the U.S. economy slips into recession, , if the economy is still relatively good, and the Federal Reserve (Fed) cuts interest rates, then this may release more liquidity and attract more retail investors to participate. In addition, the U.S. election is approaching in November, no matter who wins the election, fiscal policy will be affected. Expansion appears to be a high-probability event, which we believe is a strong incentive to buy Bitcoin as an alternative to the traditional financial system.”
The trend in the third quarter is expected to be "volatile"
Coinbase went on to say that it is uncertain how traders will react to the approval of an Ethereum spot exchange-traded fund (ETF) in the short term, but that the exchange believes that the launch of the Ethereum ETF will be beneficial to Ethereum (ETH). Long-term bullish.
Coinbase also expects the cryptocurrency to start experiencing severe price swings in the coming months before a clear trend develops. Its report reads:
“Currently, we expect price action to remain choppy in the third quarter of 2024, as the cryptocurrency market still lacks a strong narrative. For example, the market cannot decide on potential Ethereum spot ETF flows (experts expect to launch soon) ) is bullish or bearish, although we don't think this is necessarily a bad thing from a positioning perspective. This could leave room for unexpected outperformance and provide more support for ETH, even if those flows take time to materialize. But overall, we think there's likely to be more volatility over the next two months before things start to improve at the end of September."
Nate Geraci, president of The ETF Store, speculated that an Ethereum spot ETF could be approved this week, saying on the X platform earlier today: "Don't know of anything specific, just can't think of any good reason for further delay."
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