Coinbase analysts suggest that downward pressures on Bitcoin and the broader cryptocurrency market are showing signs of exhaustion, potentially paving the way for a more supportive trading environment. In their Weekly Market report released on Friday, Coinbase highlighted how certain technical factors contributing to the market’s decline are starting to diminish.
The report indicates that one significant factor relieving downward pressure is the completion of FTX’s bankruptcy estate selling its substantial GBTC holdings, as reported by CoinDesk. Additionally, net inflows into U.S. spot Bitcoin ETFs have averaged over $200 million a day in the past week, totaling $1.46 billion since January 11, further bolstering the argument for a more favorable trading environment.
As macroeconomic factors become increasingly relevant, Coinbase anticipates a potentially supportive outlook for the digital asset class in the coming weeks. The postponement of the U.S. Federal Reserve’s quantitative tightening program, coupled with a possible start to the monetary easing cycle on May 1 and an end to balance sheet reduction plans in June, suggests a favorable backdrop for Bitcoin and other tokens.
The report also notes the Fed’s recent indication of a higher likelihood of a soft landing for the U.S. economy, with core PCE inflation trending in line with the Fed’s long-run target. These factors, combined with the diminishing downside pressures on Bitcoin, could potentially support both Bitcoin and other tokens in the second quarter of 2024.
At the time of reporting, Bitcoin, the world’s largest cryptocurrency by market capitalization, saw a 1.5% increase over the past 24 hours, trading at $43,126 according to The Block’s Price Page.