Bitcoin and cryptocurrencies have generally experienced average or declining trends in the second and third quarters in recent years. With the halving just one day away, mining Bitcoin will become more expensive, so miners may start selling their Bitcoins.
In his post for X, Elja gives a candid view on the current state of the crypto market, highlighting five key factors that could signal a decline in Bitcoin and crypto prices.
Let's dig deeper into these points to get a comprehensive understanding.
Here's why Bitcoin and cryptocurrencies could fall from Q2 to Q3
BTFP program ended
The analyst will start with the end of the Bank Term Funding Program (BTFP), the Federal Reserve's emergency lending program. After the failures of Signature Bank and Silicon Valley Bank, new BTFP lending ceased, resulting in a significant loss of market liquidity. This decision could have a bearish impact in the short term, but the Federal Reserve tends to print more money, which could soften the impact.
delay in interest rate cuts
Next, he discusses the prospect of a rate cut in the X-Post, which is boosting the stock and crypto markets. Hopes for a bullish rally are fading after the better-than-expected Consumer Price Index (CPI) data and comments from Federal Reserve Chairman Jerome Powell about interest rates becoming longer-term. However, the 2024 interest rate cut raises concerns, especially for risk-on assets.
Slowdown in ETF inflows
Going forward, Erja points out that there is a noticeable shift in the flow of crypto ETFs, with declining interest from institutional investors reflected in slower inflows. This trend is especially evident for Bitcoin ETFs, where outflows consistently exceed inflows. This decline in participation by institutional investors may signal weakening confidence in the market outlook.
Uncertainty due to war situation
We all know that geopolitical tensions continue between Iran and Israel, and many analysts see this as adding to market uncertainty. On the other hand, Elja emphasizes that the market can swing significantly depending on the statements and actions of either party. Recent market reactions to similar events highlight the importance of geopolitical factors in shaping investor sentiment.
Also read: Will cryptocurrencies skyrocket? Ripple CEO reveals what's next before Bitcoin halving!
Bitcoin historical trends and the impact of halving
Summarizing his analysis, Erja said the second and third quarters were generally average to bearish for Bitcoin and cryptocurrencies. In the upcoming halving, miners may sell more as mining costs increase. Similar to his early halvings in 2016 and 2020, these variables can typically take several months to settle down.
In conclusion, the analyst advised investors to remain focused and be prepared to buy on the dip. He said that experienced crypto investors see this period of market stagnation or decline as an opportunity to buy more assets at lower prices. They predict significant growth in the future, with Bitcoin potentially reaching $150,000, Ethereum reaching $12,000, and many altcoins expected to return 50x to 100x. It is. do you agree?
Read more: Bitcoin price remains above key support. Is it time to go long BTC?
