These influences include rising geopolitical tensions, higher interest rates for longer, reflation and ballooning national debts, the report said.
By Will Canny Apr 19, 2024 at 12:14 p.m. UTC Crypto markets will be driven by macro factors in the short term, Coinbase said.
The growth of investors using bitcoin as a macro hedge has reduced volatility this cycle, the report said.
The direction of digital asset markets following the bitcoin (BTC) halving is more likely to be driven by macroeconomic factors even as crypto fundamentals remain strong, Coinbase (COIN) said in a research report on Thursday.
“These factors are largely exogenous to crypto and include increased geopolitical tensions, higher for longer rates, reflation, and rising national debts,” analyst David Han wrote.
It said “caution should be taken against extrapolating the past cycles and the impact of halving, given the prevailing macro conditions.” Read more: Goldman Cautions Against Extrapolating Previous Bitcoin Halving Cycles for Price Predictions Edited by Sheldon Reback.
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The report listed reflation, growing national debt, rising geopolitical tensions, and longer-term interest rate increases as some of these factors.
Through Will Canny.
At 12:14 PM on April 19, 2024. m. UTC.
According to Coinbase, macro factors will ultimately drive the cryptocurrency markets.
Prior halvings were supported by additional tailwinds from the cryptocurrency ecosystem.
According to the report, this cycle’s volatility has decreased due to the rise in investors using bitcoin as a macro hedge.
Even though the fundamentals of the cryptocurrency space are still solid, Coinbase (COIN) stated in a research report on Thursday that the path of digital asset markets in the wake of the bitcoin (BTC) halving is more likely to be determined by macroeconomic factors.
According to analyst David Han, “these factors are largely exogenous to crypto and include higher for longer rates, reflation, and rising national debts.”.
According to Han, this is highlighted by the recent increased correlation between altcoins and bitcoin, “indicating BTC’s anchor role in the space even as BTC firms its position as a macro asset.”. “.
Bull markets have historically been sparked by previous halvings, but the report noted that “these cyclical runups have often been accompanied by other ecosystem catalysts that provide additional tailwinds.”.
The quadrennial reward halving, which is anticipated to take place late this evening or early tomorrow UTC, slows the rate of growth in the bitcoin supply by 50%.
Although most people consider cryptocurrency to be a “risk on” asset class, Coinbase notes that “a bifurcated pool of investors (for bitcoin in particular) has been created – one which sees bitcoin as a purely speculative asset, and another that treats bitcoin as a ‘digital gold’ and hedge against geopolitical risk.”. “.
The report also noted that the decreasing size of pullbacks this cycle can be partially attributed to the increase in investors using bitcoin as a macro hedge.
Goldman Sachs (GS), a major player in Wall Street, said as much in a report released last week. “Given the current macro conditions, care should be taken against extrapolating the past cycles and the impact of halving,” it stated. “.
See also Goldman Warns Against Predicting Bitcoin Prices by Extrapolating Past Halving Cycles.
By Sheldon Reback, editor.
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An award-winning media outlet covering the cryptocurrency space is CoinDesk. There are stringent editorial policies that its journalists must follow. The owners of Bullish, a regulated digital asset exchange, the Bullish group, purchased CoinDesk in November 2023. Block owns the majority of the Bullish group. One; both businesses hold substantial amounts of digital assets, including bitcoin, and have interests in a range of blockchain and digital asset businesses. To uphold journalistic independence, CoinDesk functions as a separate subsidiary and has an editorial committee. Employees of CoinDesk, including journalists, might be compensated with options in the Bullish group.
The finance reporter for CoinDesk is Will Canny.
