A recent Coinbase report suggests that the downward pressures on Bitcoin and the wider cryptocurrency market are showing signs of exhaustion, paving the way for a potentially more supportive trading environment.
In their Weekly Market report released on Friday, Coinbase analysts highlighted that various technical factors exerting downward pressure on Bitcoin and the broader crypto market are beginning to diminish. The report suggests that the depletion of these pressures could contribute to a more favorable trading environment in the coming weeks.
One notable development mentioned in the report is the completion of FTX’s bankruptcy estate selling its substantial GBTC holdings. Coinbase analysts referred to a CoinDesk report, noting the disposal of 22 million GBTC shares by the bankruptcy estate as a significant factor alleviating downward pressure.
The report also points out that net inflows into U.S. spot Bitcoin ETFs have averaged over $200 million per day in the past week, accumulating total net inflows of $1.46 billion since January 11. The analysts anticipate macro factors to gain more relevance in the digital asset class in the coming weeks, potentially providing support for performance.
The report discussed the recent U.S. Federal Reserve’s rate decision press conference, indicating a delay in the central bank’s quantitative tightening program until the next Federal Open Market Committee meeting on March 19-20. Coinbase suggests that this delay hints at the potential commencement of the Fed’s monetary easing cycle on May 1, with a possible end to the central bank’s balance sheet reduction plans in June.
According to the report, the Fed’s announcement speech suggested an increased likelihood of a soft landing for the U.S. economy following the recent rate hike cycle. The report highlights the resilience of various economic indicators and the alignment of core PCE inflation with the Federal Reserve’s 2% long-run target.
In conclusion, the Coinbase analysts express optimism about a combination of decreasing downward pressures on Bitcoin, the possibility of a rate cut, and the coinciding Bitcoin halving, potentially providing support for both Bitcoin and other tokens in the second quarter of 2024.
