Coinbase Foresees Bitcoin Upswing: FTX Sell-Off Amid Fed’s Easing Signals

Coinbase analysts said downward pressure on Bitcoin has significantly diminished as the FTX bankruptcy estate finished selling off its large Grayscale Bitcoin Trust (GBTC) holdings. This development could support Bitcoin and other digital tokens in the second quarter 2024. The prospect of Fed monetary easing beginning in May and an end-to-balance sheet reduction in June adds to the favorable outlook.

In its Weekly Market report on Friday, Coinbase described how certain technical factors weighing crypto market performance to the downside are starting to dissipate. The analysts said this may lead to a more constructive trading environment in the coming weeks.

“Many technical factors pressuring crypto performance to the downside are starting to be exhausted, in our view, which may give way to a more supportive trading environment in the weeks ahead,” Coinbase analysts stated in the report.

Coinbase highlighted the FTX bankruptcy estate’s sale of its 22 million shares GBTC position as a significant development. This transaction, mentioned in a recent CoinDesk report, has substantially alleviated the downward pressure.

In addition, Coinbase noted that net inflows into U.S. spot bitcoin exchange-traded funds (ETFs) had averaged over $200 million per day over the past week. This has brought total net inflows to $1.46 billion since January 11, further evidence of diminishing selling momentum. The analysts expect macro factors to become more relevant, potentially supporting digital asset performance in the weeks ahead.

Coinbase: Fed’s Delay Boosts Crypto Market Outlook

The Federal Reserve’s most recent comments highlight that Coinbase anticipates a delay in quantitative tightening. The news conference on the rate decision stated that the FOMC meeting scheduled for March 19–20 is expected to be delayed.

According to the report, the Fed’s next round of monetary policy easing may start on May 1. Concurrently, June might be the month when the balance sheet reduction begins.

Furthermore, the Federal Reserve’s remarks suggested a higher likelihood of a mild economic downturn after its rate rises. Core inflation metrics are approaching the Federal Reserve’s 2% objective. Moreover, Coinbase suggests a rising probability of a cryptocurrency market rebound, citing robust recent economic data.

Coinbase mentioned fading Bitcoin downward pressures and potential Fed policy shifts around the halving time. Moreover, the company believes these factors could support Bitcoin and other tokens in Q2 2024.

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