In recent days, Bitcoin has shown promising signs of recovery, gaining 3.31% in the last week to trade above $43,000. According to a Coinbase Bitcoin 2024 report, this positive momentum is not just a fleeting trend but could pave the way for a significant bullish turn in the second quarter of 2024.
Downside Pressures Diminishing: A Turning Tide
Coinbase analysts highlight a crucial factor in bitcoin’s upward trajectory – the diminishing downside pressures. These pressures, which had been exerting a drag on the Bitcoin market, are becoming exhausted. The completion of FTX’s bankruptcy estate selling 22 million GBTC shares is a noteworthy development, as it significantly reduced the downward pressure on bitcoin’s price.
Coinbase analysts stated in their report:
“Many technical factors pressuring crypto performance to the downside are starting to be exhausted, in our view, which may give way to a more supportive trading environment in the weeks ahead.”
Macro Factors and Market Support
Net inflows into U.S. spot bitcoin ETFs have averaged over $200 million for four consecutive days, totaling $1.46 billion since January 11. This influx of funds is seen as a potential game-changer, likely to bring about a more supportive trading environment.
The analysts added:
“Consequently, we expect macro factors to become more relevant for the digital asset class in the weeks ahead, which could be supportive for performance.”
Coinbase’s Weekly Market report underscores the increasing relevance of macroeconomic factors. Analysts emphasize their significance in driving the digital asset class forward. The report draws attention to the U.S. Federal Reserve’s recent decisions, hinting at a possible easing cycle commencing on May 1. Analysts suggest that this could be a positive sign for the digital asset class, aligning with an optimistic outlook for Bitcoin in Q2, 2024.
In other words, the delay in the Fed’s quantitative tightening and the potential easing cycle are seen as key catalysts. With core PCE inflation aligning with the Fed’s long-term target, the economic landscape becomes more favorable for bitcoin.
The report highlights:
“In the U.S., the likelihood of a soft landing seems higher than it was a few months ago with the economy ostensibly making only minimal trade offs between activity and inflation. Core PCE inflation, the Federal Reserve’s preferred measure of prices, at 2.7% year-on-year is trending in line with their 2% long-run target, and the assortment of recent economic indicators has been fairly resilient […] The easing cycle set to commence in May could herald a new era of growth for Bitcoin and the broader crypto market.”
Coinbase’s Optimistic Forecast for Q2 2024
Coinbase analysts, in their bullish outlook, predict a favorable scenario for Bitcoin in the second quarter of 2024. They anticipate that the combination of diminishing downside pressures, potential rate cuts, and macroeconomic shifts could create a supportive environment for Bitcoin.
The report also highlights the importance of the next Bitcoin halving, expected to take place in April 2024. Coinbase analysts speculate on the potential concurrent impact of the Federal Reserve’s monetary policies and the upcoming Bitcoin halving event. The anticipation of a rate cut coinciding with the halving is viewed as a potential catalyst for a significant market upturn.
This, combined with reduced pressure on Bitcoin’s price from external factors, and institutional investors’ access to bitcoin ETFs, sets the stage for a bullish Q2 2024.
Bitcoin 2024: A Positive Outlook
As bitcoin currently keeps steady above the $43,000 mark, Coinbase analysts’ optimistic outlook suggests a broader sentiment that the bitcoin market is on the verge of a bullish phase. The convergence of macroeconomic factors, strategic financial movements, and upcoming events like Bitcoin halving could catalyze the next major rally in the digital asset space. Investors, inspired by these insights, are looking forward to a bullish 2024 as they navigate the complexities of the evolving digital asset ecosystem.
