There are many factors that could improve the cryptocurrency market in the second quarter; However, positive effects may not be evident until the latter half of April, David Dong, head of research at Coinbase, said in a recent post.
“The setting for Q2 2024 appears to be more favorable for cryptocurrency performance, from our point of view. However, we believe that these positive factors may only emerge more clearly starting from the second half of April,” Duong stated.
According to Duong, despite the recent US holidays and corporate financial adjustments, the cryptocurrency market has shown surprising stability. However, he expects that the approaching tax season may prompt investors to sell their holdings, which could cause prices to decline.
Duong notes that the recent market volatility is due to speculative trading strategies that focus on “trading MicroStrategy short versus trading Bitcoin long.” On the bright side, he believes many of the concerns identified earlier this month appear to be waning. This may create a more favorable environment for the cryptocurrency market.
Duong's analysis also points to the dynamics of supply and demand for Bitcoin based on two key events: the halving event and the review process for new financial products such as Bitcoin spot ETFs. Specifically, it is believed that the conclusion of the review period for spot Bitcoin ETFs by major financial institutions, coupled with continued institutional interest, could boost demand for Bitcoin.
“On the demand side, the 90-day review period that many telcos use when conducting due diligence on new financial offerings — such as spot bitcoin ETFs — could end as early as April 10,” Dong said. “We believe this could unlock significant capital for spot bitcoin ETFs in the US in the medium term.”
“At the same time, institutional interest in this space appears to remain high based on the level of leveraged short positions in Bitcoin futures contracts on the Chicago Mercantile Exchange, which rose to a record high of 19,917 contracts as of March 19, Dong added. Commodity futures.
On the supply side, the halving event is expected to impact supply dynamics by reducing the rate of new Bitcoin entering the market. If demand remains constant or grows, the price of Bitcoin will likely rise.
