Blockchain
BTC Summer 2024: Market Trends and Future Drivers Analysis
Bitcoin is currently in a bit of a lull between narratives. The excitement, speculation, and rapid pace of inflows since the launch of ETFs have died down. There isn’t much good news on the horizon, perhaps until the US elections in November. In the meantime, BTC seems to be facing mostly crypto and macro headwinds.
In June, BTC nearly hit all-time highs before higher-than-expected nonfarm payrolls data sent prices crashing to $58k despite lower inflation numbers. The start of Mt. Gox’s $9 billion BTC distribution and the German government’s sale of seized BTC saw BTC hit a low around $54k but has now bounced back to the low 60k’s. Once Mt. Gox distributions are completed in the coming months, it will remove significant price risk. Despite these negative factors, BTC has shown resilience. The next potential catalyst is the approval of the ETH ETF. With less liquidity than BTC, strong inflows could push ETH higher although a BTC-like oversupply could occur.
Politically, we have seen Donald Trump include positive comments about BTC and digital assets in his usual campaign speech, taking an America-first stance, aiming to keep jobs and wealth here in the United States. If Trump is re-elected, it is likely that the price of BTC would benefit (although the shape of the Trump administration’s policy on digital assets is unclear). It is possible that we could also see speculative buying ahead of Election Day – a positive narrative on the horizon.
Finally, we saw a number of major central banks cut rates in June, including Canada and the EU. As one of the biggest correlates to the price of BTC is global M2 LiquidityThese rate cuts suggest that the trend of increasing global liquidity is moving in a favorable direction.
In early June, BTC nearly hit all-time highs before tailwinds pushed it toward June lows. Despite a lower-than-expected PPI, the market showed signs of buyer fatigue. Subsequently, Mt. Gox announced BTC distributions to creditors in July and the German government sold seized BTC, sending prices below $60,000. ETH remained more resilient but still down from the May ETF rally.
BTC currently has no clear narrative, with only negative events on the horizon, giving buyers little to rally around. In contrast, ETH is pushing up its ETF go-live date, which should spark excitement in the market due to its lower liquidity compared to BTC. Many are expecting the S-1 ETF to be approved by July, which could spark interest and demand. Investors will also be watching to see if altcoins and BTC rally alongside ETH.
On the political front, Trump continues to speak positively on BTC and crypto in his campaign speeches, while Biden remains largely silent on the issue. Later this month, BTC 2024 will be held in Nashville, with several politicians, including Donald Trump, in attendance. This venue would provide a sensible place for a candidate to announce major positions on the topic of digital assets.
Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.