Chainfeeds Introduction:
Coinbase analyzed the outlook for the crypto market in the fourth quarter of 2024, predicting that U.S. interest rate cuts and China’s fiscal and monetary stimulus policies will lead to increased market liquidity and have a positive impact on Bitcoin (BTC).
Source:
https://foresightnews.pro/article/detail/69106
Article author:
Coinbase
Viewpoint:
Coinbase: Our impression from the Token2049 conference was that sentiment among crypto investors seemed fairly positive, though this could be related to the event coinciding with the Federal Reserve’s 50 basis point rate cut on September 18. However, while many market participants were bullish on BTC, we encountered some skepticism about ETH, as the token did not appear to benefit from the launch of a spot ETH ETF in the U.S. more than two months ago. (Note that many attribute this to the recent surge in Ethereum Layer 2 activity, but we have previously explained why we believe this is an incomplete explanation for ETH’s underperformance relative to its peers.) In addition, some believe that there are more higher beta instruments (such as L2 tokens) benchmarked to ETH today than in the previous cycle, which has led to a crowding-out effect. At the same time, we have not seen a major shift in themes in the crypto community that is consistent with our outlook for the end of 2023. That is, people seem to be more focused on emerging alternative Layer 1 networks rather than Ethereum Layer 2 networks, and the potential for Bitcoin L2 to provide enhanced programmability to the network and new revenue streams for miners. There is also a more pressing need for general consumer applications than for crypto infrastructure protocols, which corresponds to a broader review of crypto fundamentals. Looking ahead, we are constructive on our outlook for Q4 2024, based primarily on our bullish view of the current macro environment, as well as the idiosyncratic factors mentioned above. For example, just last week, we believed that a more important impact of the Fed’s decision to cut interest rates by 50 basis points was that it provided cover for other monetary authorities to take more stimulus measures. Subsequently, China unveiled a massive dual fiscal and monetary stimulus package, which included record interest rate cuts, liquidity support for stocks, and a reduction in bank reserve requirements — all in an effort to “boost lending and reduce the burden of existing lending.” The reduction in bank reserve requirements should be particularly beneficial for market liquidity, which we previously found to be positively correlated with BTC’s performance. That said, we expect that the positive impact of these measures on cryptocurrency performance may be delayed.
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