Bitcoin And Crypto Closing Out Dismal Q2 And Analysts Say More Pain Is Imminent
The second quarter of 2024 has been a roller coaster for Bitcoin and the entire cryptocurrency market. On that note, the price of Bitcoin lost almost 15% in this quarter and the altcoins fared even worse. The difficult quarter is ending but the future of the crypto space is still uncertain.
A powerful start to 2024 had the bulls projecting $100,000 for Bitcoin at some point. However, relentless selling pressure between April and June, interrupted by a short-lived bounce in May, has the price struggling not to plunge below $60,000 as the quarter ends.
Entering the second quarter, Bitcoin was trading near the $71,000 level and it is now struggling to remain above $60,500 on June 30. That represents a drop of about 14%. Assisted by the tailwind of what now seems to be a certain spot ETF approval, Ether (ETH) outperformed, but was still in the red in the second quarter with around a 5% plunge.
Dragged down by even bigger drops in most altcoins, the general crypto market index lost over 21% in the past three months. Among the notable movers were Solana (SOL) which lost 30%, Ripple’s XRP offloaded 23%, while Dogecoin (DOGE) dipped by 42%. Strangely, the best performer was Ether, which lost around 5%.
Positive Catalysts Disappear
Bitcoin’s dismal second quarter price action, for now, could potentially be thought of as a correction in a bigger bullish movement that saw the token gain almost five-fold from January 2023 lows to a new record above $73,500 in mid-March 2024.
The anticipation surrounding the spot Bitcoin ETF approval, then the approval, and then the massive inflows into the new funds were seen as major catalysts for the rise. Also in play were several macro factors, especially the expectation of a huge series of interest rate cuts in 2024 from the U.S. Federal Reserve.
Inflation, nevertheless, has failed to cooperate, and to date, there has been no easing of monetary policy in the United States, with more than one member of the central bank now not expecting to cut rates even once in 2024.
With ETF inflows old news and even on occasion reversing to outflows, and hopes for lower interest rates plunging daily, buyers seem to have taken the sidelines until a new catalyst comes up.
More Pain In Store In Q3
Bitcoin entered a downtrend on June 20, as highlighted by Markus Thielen at 10X Research, laying out ten reasons why the value of the flagship crypto could drop to $55,000 in the short term. Thielen noted that most trend-following funds look at the same signals and might get inclined to heavily into short positions.
Furthermore, while some bulls might have been excited that the presidential debate appeared to favor Donald Trump, who has recently come out as a significantly pro-crypto and pro-Bitcoin candidate, Thielen stated that President Biden’s poor performance increased the chance of a replacement Democratic nominee who may end up as a far more formidable opponent in the November election.
Thielen also commented extensively about seasonality. The third quarter has historically been recorded as the weakest one, with an average return of only 5% in the last 13 years. This compares to the average returns above 60% in the second and fourth quarters.
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