Crypto markets likely to remain choppy in Q3, Coinbase analysts say

Crypto price action is likely to continue on a choppy trajectory for the rest of Q3, 2024, analysts at crypto exchange Coinbase say.

Coinbase’ head of institutional research David Duong and David Han, an analyst at the US-based crypto exchange, shared their forecast in the company’s weekly market report. They anticipate greater volatility for cryptocurrencies over the next month or two before a potentiall rally in the fourth quarter.

JPMorgan analysts offered a similar bullish analysis, although with a different timeline, noting crypto markets could rebound in August.

Q3 started on a sour note

The crypto market experienced a bullish trend earlier this year, driven by the spot Bitcoin ETF narrative, with Bitcoin reaching a new all-time high above $73,000.

However, Q2 saw broader market struggles due to multiple headwinds, including interest rate decisions, miner capitulation, and significant selling by government-controlled wallets, extending into the third quarter.

“The third quarter started on a sour note with supply overhangs generated by indiscriminate bitcoin selling from price-insensitive sources. That includes the German government’s Bundeskriminalamt (BKA), which began selling their supply of seized bitcoin on June 19,” the analysts said in the commentary published on Friday.

Mt. Gox is another factor and the analysts say the uncertainty could be more damaging than the actual selling.

“For now, we expect the price action to remain choppy in 3Q24, as crypto markets still lack strong narratives,” they wrote.

Analysts have a bullish perpective for Q4

On a positive note, the SEC’s approval of spot ETH ETFs and recent SOL ETF applications are key developments. Despite the market’s uncertainty about whether ETH ETFs flows will be bullish or bearish, Duong and Han believe the outlook is unlikely to be negative “from a positioning perspective.”

“This could leave room for surprise outperformance and offer ETH more support, even if the flows take time to materialize. Overall though, we believe the next two months are likely to produce more volatility before things start to improve more earnestly in late September,” the two added

Looking ahead to the fourth quarter, potential interest rate cuts and the US election in November could significantly impact the market.

Fiscal expansion, regardless of the election outcome, could position Bitcoin as a strong buy at current levels, particularly as an alternative to traditional finance.