Coinbase, in its weekly market commentary, highlighted the start of Q3 on a negative note due to supply overhangs caused by indiscriminate Bitcoin selling, particularly from the German government. Although the amount of Bitcoin sold was not significant compared to daily trading volumes, it did impact Bitcoin prices. However, there is relief in sight as the German government has now emptied all its Bitcoin holdings, which should help alleviate some market distortions.
The Mt. Gox repayments that began on July 5 also had an impact on the markets, but it remains uncertain how much of the repaid BTC is being sold. Coinbase emphasized that the uncertainty surrounding the situation is more damaging than the actual selling, especially since the largest creditors are likely hedged. Looking ahead, there are concerns about a potential recession in the US later this year or in early 2025, with reports suggesting a slowdown in the economy based on macro data.
Coinbase believes that the US economy may have peaked in the second quarter of 2024, leading them to predict that the Federal Reserve will start cutting interest rates from September 18. Recent data, such as the June CPI print, supports a more dovish Fed bias. However, the company also cautioned that rate cuts may not necessarily be bullish for the markets, especially if there are fears of a significant economic slowdown.
The upcoming US elections in November could bring about fiscal expansion, making Bitcoin an attractive alternative to the traditional financial system. In the crypto markets, Coinbase expects price action to remain choppy in the third quarter of 2024, as there is a lack of strong narratives. The uncertainty surrounding potential events like the introduction of a spot ETH ETF could lead to unexpected market movements.
The recent Ethereum Community Conference focused on key technical themes such as layer-2 scaling, ETH staking issuance, and cross-chain interoperability. Ethereum’s roadmap as a decentralized settlement layer remains strong, with discussions reaffirming its position in the crypto space.