Crypto Market: Mixed Signals in Q3 Amid Positive News and Geopolitical Uncertainties

The third quarter of 2024 ended with a less brilliant performance than expected for the crypto market, despite a series of favorable news that should have pushed prices higher.

These included the reduction of interest rates in the United States, new ETF approvals and the injection of liquidity by China. However, these developments did not translate into particularly positive performances.

Bitcoin and Altcoins in Pain

At the end of September, Bitcoin stood at $56,000, far from its yearly high of $73,000. Altcoins, which were even more affected, suffered greater losses.

Historically, the summer months tend to be unfavorable for cryptocurrencies, a trend that is also reflected in traditional financial markets. However, the last quarter of the year, which usually sees strong performances, is expected to reverse this trend in the crypto market.

A climate of uncertainty on the crypto market despite positive signs

Despite encouraging news from the United States, the crypto market is still dominated by uncertainty. This is fueled by mixed economic data and the upcoming US presidential election. In addition, global geopolitical tensions, including the war in Ukraine, Israeli military intervention in Lebanon, and rising tensions with Iran, continue to weigh on investor sentiment.

The cryptocurrency market, however, maintains an upward trend, which is measured mainly by open positions in options. This has prompted many investors, based on internal and external analysis, to maintain their positions, with the aim of disposing of the portfolio close to the American elections.

The crypto maarket in Q3: An unexpected correction

The summer saw a stagnation in the overall crypto market capitalization, remaining stable at $2.2 trillion. Bitcoin also maintained a slight growth, stabilizing around $1.2 trillion, with an increase in its market dominance, going from 51% to 56%. This correction can be attributed to several economic factors.

In the United States, falling consumer prices, driven by falling gasoline costs and slowing rents, led the Federal Reserve to cut interest rates by 50 basis points, a more aggressive move than expected. Further cuts are expected by the end of the year, increasing the appeal of high-risk investments such as cryptocurrencies.

China has also introduced large amounts of liquidity to support economic growth, but this move has not yet generated a significant increase in the value of cryptocurrencies.

Cryptocurrency ETFs: Exponential Growth

Despite the uncertain crypto market, cryptocurrency ETF adoption continues to grow. Funds managed by giants such as Blackrock and Fidelity have seen their market caps increase from $30 billion to $56 billion in three months.

Each Bitcoin ETF requires the purchase of the underlying asset, reducing the available supply and creating further support for the market’s growth. This ETF has already become one of the biggest successes in American financial history and forecasts indicate that the growth trend is only just beginning.

Forecast for the fourth quarter: between uncertainties and opportunities

After a strong start to the year, culminating in the approval of the first Bitcoin ETF, the second quarter saw a setback, despite the increased acceptance of cryptocurrencies in the financial landscape.

The third quarter, characterized by fluctuations, ended in line with the results of the previous quarter, with limited variations. Seasonality, with the generally unfavorable summer, played a key role.

The outlook for the fourth quarter, however, remains positive. Analysts, traders and institutions such as Blackrock continue to set ambitious targets for Bitcoin and other cryptocurrencies. In particular, a possible victory of Donald Trump in the next presidential elections, a known supporter of cryptocurrencies, could act as a catalyst for a new rise.

With increased global liquidity, a low interest rate environment, and pre-election uncertainty in the United States, the crypto market could find fertile ground for a major recovery in the final quarter of the year.

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(Featured image by Traxer via Unsplash)

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