A new report from Coinbase Research notes that macroeconomic stress is taking a heavy toll on the cryptocurrency market. Analysts expect the market to remain fragile in the coming weeks amid a lack of catalysts that could push prices higher. This makes many investors uneasy as the global economic environment is changing.
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ToggleThe influence of macro factors
The report highlights the cryptocurrency market’s increased dependence on broader economic events. Recently, the Bank of Japan's decision to raise interest rates is considered to be the trigger for unwinding the yen carry trade, which has had an impact on global markets. In addition, geopolitical tensions that have erupted again in the Middle East have also triggered concerns about oil supply, further exacerbating market instability. These macro pressures truly affect investor sentiment and market stability.
Analysts at Coinbase noted that leverage in the on-chain spot market has dropped significantly, which may mean that the recent sharp decline has made investors more cautious. They believe that with no clear catalysts currently in place, cryptocurrency price action will continue to be dominated by macroeconomic factors in the short term.
Third quarter strategy
Looking ahead, Coinbase is taking a cautious stance in the third quarter of 2024. The company's outlook is largely based on upcoming U.S. inflation data, which could influence market sentiment. If the inflation data is better than expected, it may boost confidence; but if the data is not ideal, investor confidence in cryptocurrencies may be further hit.
Still, analysts aren't entirely pessimistic. They said that if the U.S. economy recovers, token valuations may recover. Some analysts even hypothesize that if macroeconomic conditions stabilize, Bitcoin is expected to reach an all-time high later this year. These differing views reflect the current uncertainty in the cryptocurrency market.
