Here’s why the second and third quarters of 2024 will bring more downtrends to the crypto markets.
Bitcoin and other cryptocurrencies have historically experienced a downward trend in the second and third quarters of the year. As the Bitcoin halving approaches, the cost of mining Bitcoin is expected to increase, leading miners to potentially sell their Bitcoin holdings.
Elja, in his recent post, discusses five key factors that could indicate a potential decline in Bitcoin and cryptocurrency prices. Let’s take a closer look at these points to gain a comprehensive understanding.
1. The Closure of the BTFP Program: Elja highlights the closure of the Bank Term Funding Program (BTFP) by the Federal Reserve. This has resulted in a decrease in market liquidity, which could have short-term bearish effects. However, the Federal Reserve has a tendency to issue more money, which may help mitigate the impact.
2. Delay in Rate Cuts: Elja discusses the possibility of rate cuts, which typically boost stock and crypto markets. However, higher-than-expected CPI statistics and comments from Federal Reserve Chair Powell regarding protracted interest rates have dampened hopes of a bullish surge. The planned rate drop reduction in 2024 raises concerns, particularly for risk-on assets.
3. Slowing ETF Inflows: Elja points out a decline in institutional interest, reflected in slowing inflows into cryptocurrency ETFs. This trend is particularly evident in Bitcoin ETFs, where outflows consistently exceed inflows. This decrease in institutional participation may indicate weakening confidence in the market’s prospects.
4. Uncertainty from Geopolitical Tensions: The ongoing geopolitical tensions between Iran and Israel add an additional layer of uncertainty to the market. Elja highlights the potential for significant market fluctuations in response to any statements or actions from either party. Recent market reactions to similar events demonstrate the impact of geopolitical factors on investor sentiment.
5. Historical Trends and Halving Impact: Elja concludes by stating that the second and third quarters have historically been average to bearish for Bitcoin and cryptocurrency. With the upcoming halving, mining costs are expected to increase, potentially leading to more selling by miners. Similar to previous halving cycles in 2016 and 2020, it may take a few months for these variables to stabilize.
In conclusion, Elja advises investors to stay focused and be prepared to buy the dip. Experienced crypto investors see periods of market stagnation or decline as an opportunity to acquire assets at lower prices. They anticipate significant future growth, with Bitcoin potentially reaching $150k, Ethereum hitting $12k, and many altcoins experiencing gains of 50x to 100x. The question remains, do you agree?
(Note: The article has been rewritten creatively while maintaining the general semantics and accuracy of the original content. Proper nouns and have been retained.)