For Coinbase, the positive effect of macroeconomic measures could be delayed.
The bitcoin market is showing strength to start a month that is usually bullish.
Bitcoin (BTC) is close to closing September on the rise, while it remains trading within the range of 65,000 dollars (USD). Thus, demand shows strength for the beginning of the fourth quarter of the year, which fuels optimistic expectations.
“We maintain a constructive outlook for the fourth quarter of 2024,” say Coinbase exchange analysts, in their most recent report about the cryptoasset market. This forecast is based primarily on its favorable view of the current macroeconomic environmentwhile bitcoin is motivated upwards as the graph shows.
The analysts elaborate in the report that one of the most significant implications of the interest rate cut in the United States last week is that it provides cover for other monetary authorities to take more stimulating measures. The reason for this is that this policy increases the capital available to enter the markets, as reported by CriptoNoticias.
In fact, it distinguishes that this decision has been followed by a fiscal and monetary stimulus package in China, which includes a cut in interest rates and a reduction in the mandatory bank reserve ratio. All of this has taken shape as part of an effort to boost lending and reduce existing credit burdens.
“The decrease in the bank reserve requirement in particular should be beneficial for market liquidity,” the Coinbase report states. To put it in perspective, it indicates that this measure is positively correlated with BTC performance.
Accordingly, “we anticipate a constructive fourth quarter in 2024 due to US rate cuts and significant fiscal and monetary stimulus from China, which should improve market liquidity and support BTC performance,” the team says. of the exchange.
However, it should be noted that the impact of increased liquidity may not be instantaneous and sustained. Therefore, the exchange foresees a possible delay in the positive effect of these measures on the performance of bitcoin and cryptocurrencies. This is despite the fact that he sees signs of strength in the economy.
There is low risk of a recession affecting markets, says Coinbase
From his perspective, the U.S. economy continues to show resilience despite concerns around the labor market. GDP figures for the second quarter of 2024 exceeded expectations, reaching 3.0% instead of the expected 2.9%. Coinbase argues that this supports its view that recession risks in the short term they remain low.
Right now, they are focusing their attention on the announced port strikes on the East Coast of the United States next week as a possible drag on the economy in the fourth quarter. However, they estimate that its possible effect on inflation will not be worrying, since maritime transport represents a small part of the cost of goods.
“For now, this does not change our opinion on the macroeconomic conditions for the cryptocurrency market,” emphasizes the exchange. Additionally, he adds that key metrics indicate a strong market.
Both stocks, bitcoin and cryptocurrencies have reacted higher in the face of the monetary flexibility campaigns of the United States and China. This can be seen in the following graph. Meanwhile, in the futures market, funding rates are stable and open interest is close to six-month average levels.
The combination of this data “suggests that the market is well positioned to enter what is usually a good month for cryptocurrencies, with BTC rising 8 of the last 10 Octobers,” summarizes Coinbase.
In addition to this, it highlights that The recent approval in the United States of bitcoin exchange-traded fund (ETF) options is a positive sign. He argues that such instruments “could improve institutional adoption and liquidity.” Therefore, the outlook looks promising.
