Fading Downside Pressures on the Crypto Market Could Foster a Better Trading Environment: Coinbase Analysts

Analysts at top-US-based crypto exchange Coinbase say that fading downside pressures could create healthier market conditions for investors.

In a new analysis, Coinbase says that many factors dampening Bitcoin (BTC) and the broader digital assets industry – such as liquidations by bankrupt crypto exchange FTX and the financial troubles of crypto lender Celsius – are clearing up, paving the way for a better trading environment.

“Many technical factors pressuring Bitcoin specifically (and crypto more broadly) are starting to be exhausted, in our view. This is evidenced by the liquidations at FTX (disposing of their Grayscale Bitcoin Trust shares, for example) as well as the emergence of some large defunct entities from bankruptcy.

Indeed, net inflows into US spot Bitcoin ETFs (exchange-traded funds) have averaged more than $200 million daily over the last week (taking the total net inflows to $1.46 billion since January 11) with a healthy daily volume of ~$1.35 billion.

Consequently, we expect macro factors to become more relevant for the digital asset class in the weeks ahead, which could be supportive for performance. In the US, the likelihood of a soft landing seems higher than it was a few months ago with the economy ostensibly making only minimal tradeoffs between activity and inflation.”

Furthermore, Coinbase says that it expects a combination of the Federal Reserve loosening its tight monetary policies in May and BTC’s upcoming halving event in April will together create a positive setup for crypto assets in general.

Bitcoin’s halving occurs every four years when miners’ rewards get cut in half.

“We expect rate cuts in the US to start in May and the tapering of quantitative tightening soon after, coinciding with idiosyncratic events like the Bitcoin halving and creating a positive setup for the asset class more broadly.”

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