Exchange of cryptocurrencies According to Coinbase, a number of the technological constraints on bitcoin and cryptocurrencies in general are beginning to wear thin. The analysts at Coinbase explained, "We expect macro factors to become more relevant for the digital asset class in the weeks ahead, which could be supportive for performance."
The Crypto Outlook for Coinbase
In its "Weekly: Constructive Outlook" report, which was released on Friday, cryptocurrency exchange Coinbase (Nasdaq: COIN) provided its predictions for the future of bitcoin. Head of institutional research at Coinbase David Duong and institutional research analyst David Han provided the following explanations as report authors:
We believe that a lot of the technical pressures on bitcoin in particular (and on crypto in general) are beginning to fade.
The liquidations at FTX (the sale of their Grayscale Bitcoin Trust or GBTC shares, for instance) and the resurrection of certain sizable bankruptcies serve as proof of this. In fact, during the past week, net inflows into U.S. spot bitcoin ETFs have averaged more than $200 million per day, bringing the total net inflows to $1.46 billion since January 11 with a robust daily volume of roughly $1.35 billion, according to Coinbase analysts.
They stated, "We anticipate that in the coming weeks, macro factors will become more significant for the digital asset class, which may be beneficial for performance."
The paper also covers the prospects for the US economy. It explains why there seems to be a greater chance of a soft landing now than there was a few months ago, given that the American economy appears to be making few trade-offs between inflation and activity. The Coinbase analysts predict that the Federal Reserve will reduce interest rates by 100 basis points this year because they think the disinflationary trend will continue. In comparison, this prediction is higher than the approximately 150 basis points priced into Fed funds futures and the 75 basis points indicated in the dot plot. They came to the following conclusion:
Rate reductions in the US are anticipated to begin in May, followed shortly by a tapering of quantitative tightening. These events are expected to coincide with unique occurrences such as the halving of bitcoin, which will create a favorable environment for the asset class as a whole.
Regarding the cryptocurrency market and the US economy, do you agree with Coinbase? Tell us in the space provided for comments below.