Bulls predicted a strong start to 2024, predicting that the price of bitcoin {{BTC}} would hit $100,000 this year. However, continued selling pressure in April and June (interrupted by a rebound in May) has left the price struggling to stay below $60,000 as the quarter draws to a close.
Entering Q2, bitcoin was trading just below the $71,000 level and at the time of writing (roughly 60 hours before Q2 officially closes) was trading at $60,800, down over 14%. Aided by the tailwind of what now appears to be certain spot ETF approval, ether {{ETH}} outperformed but was still in the red in Q2, down around 5%.
Dragged by even bigger declines in many altcoins, the broader CoinDesk Index has fallen more than 21% in the past three months. Among movers, Solana {{SOL}} fell 30%, Ripple’s {{XRP}} fell 23% and Dogecoin {{DOGE}} fell 42%. The index’s best performer was the ethereum mentioned above with a decline of 5%.
Positive catalysts disappear
Bitcoin’s disappointing price action in the second quarter can be seen for now as a correction within a larger bull move, which saw the token nearly quintuple from its January 2023 lows to a new all-time high of over $73,500 in mid-March 2023 this year.
The anticipation of the spot bitcoin ETF approval, then the approval, and then the massive inflows into the new funds were certainly major catalysts for the rise. Macroeconomic factors also played a role, namely the expectation of a significant series of rate cuts by the US Federal Reserve in 2024. However, inflation has not cooperated and to date there has been no easing of monetary policy in the US, with more than one member of the central bank now expecting no rate cuts this year.
With ETF inflows becoming old news and sometimes even turning into outflows, and hopes for lower interest rates fading daily, buyers appear to be holding off until a new catalyst emerges.
More pain ahead in Q3?
Bitcoin entered a downtrend on June 20, writes 10X Research’s Markus Thielen, outlining 10 reasons why the price could drop to $55,000 in the near term. Thielen noted that many trend-following funds are looking at the same signals and may be tempted to take short positions.
Furthermore, while some optimistic people may have been excited that the presidential debate appeared to favor Donald Trump — who has recently been strikingly pro-crypto and pro-bitcoin — Thielen suggested that President Biden’s poor performance increased the chances of a replacement Democratic candidate who could be a much more formidable opponent in the November elections.
Thielen also pointed out the seasonality. The third quarter is historically the weakest, with an average return of just 5% over the past 13 years. This compares to average returns of over 60% in both the second and fourth quarters.
