Coinbase Analysts See Reduced Pressure on Bitcoin, Potential Q2 Relief from Fed Policy

Bitcoin and a pressure measuring barometer

Coinbase analysts see lessened downward pressure on Bitcoin due to GBTC sell-off and anticipate potential support for Bitcoin and other tokens in Q2 2024 due to the expected Fed policy shift towards easing. However, they acknowledge the inherent uncertainties surrounding the cryptocurrency market and the long-term implications of the Fed’s policy decisions.

Coinbase analysts have identified a potential turning point for Bitcoin, suggesting that downward pressure on the cryptocurrency has eased significantly due to the recent sell-off of large GBTC holdings by the FTX bankruptcy estate. This, coupled with the anticipated shift in Federal Reserve monetary policy towards easing, offers a glimmer of hope for Bitcoin and other tokens in the second quarter of 2024.

Reduced Pressure from GBTC Sell-Off

Analysts at Coinbase attribute the lessened downward pressure on Bitcoin to the ongoing liquidation of assets by the FTX bankruptcy estate. These assets included a substantial amount of Grayscale Bitcoin Trust (GBTC) shares, which previously represented a significant overhang on the Bitcoin market due to their limited liquidity. With these shares now entering circulation, analysts believe the selling pressure on Bitcoin has decreased.

Potential Support from Fed Policy Shift

Adding to the potential for a positive second quarter, the analysts anticipate a change in Federal Reserve monetary policy. The Fed is projected to begin an easing cycle, potentially involving interest rate cuts, in May 2024. Additionally, the balance sheet reduction program initiated in June 2023 is expected to conclude, further contributing to increased liquidity in the financial system. This shift in policy, if it aligns with expectations, could provide much-needed support for Bitcoin and other risk assets that have struggled alongside rising interest rates.

Uncertainties and Long-Term Outlook

Despite the cautiously optimistic outlook, Coinbase analysts acknowledge the inherent uncertainties surrounding the cryptocurrency market. Geopolitical tensions, regulatory developments, and unforeseen events can all impact the price of Bitcoin in unpredictable ways. Additionally, the long-term implications of the Fed’s policy shift remain to be seen.

Author: Grace

Grace likes gardening. She holds some BTC and ETH.