Coinbase Institutional Forecasts Choppy Q3, Says Crypto Still Lacking Strong Narratives

The institutional arm of US-based digital asset exchange platform Coinbase says crypto investors should be prepared for more consolidation this quarter.

According to new research by Coinbase Institutional, crypto traders are wary of the possibility that the US economy will experience a recession.

However, Coinbase says bullish catalysts are on the horizon as long as the economy remains stable.

“The concern is that cuts may not be bullish for markets if there’s a fear of a bigger slowdown. That is, retail investors will likely be reluctant to enter new stock or crypto positions if the US economy falls into recession.

On the other hand, if the economy is still doing relatively well, and the Fed cuts, then that could unlock more liquidity and invite more retail participation.

Plus we have a US election coming in November, where fiscal expansion seems like a strong possibility whoever wins. That’s a strong incentive to buy Bitcoin as an alternative to the traditional financial system, in our view.”

Coinbase goes on to say it is uncertain how traders will react in the short term to the approval of Ethereum (ETH) exchange-traded funds (ETFs). But the crypto exchange notes the launch of Ethereum ETFs is long-term bullish for the leading altcoin.

Coinbase also says it expects crypto to start witnessing wild price swings in the next couple of months before establishing a clear trend.

“For now, we expect the price action to remain choppy in Q3 2024, as crypto markets still lack strong narratives. For example, the market can’t decide whether potential spot ETH ETF flows (a launch is expected by pundits fairly soon) will be bullish or bearish, although we think that may not necessarily be a bad thing 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.”

Ethereum is trading for $3,205 at time of writing, an increase of over 2% in the past day.

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