Bearish Macro Factors Might Affect Rate Cut Momentum: Coinbase

Digital asset exchange, Coinbase has hinted at a probable reduced bull run if the Federal Reserve cuts interest rates because of larger macro concerns. Recent developments have affected the prices of digital assets plunging market sentiments in the last two weeks. However, bulls remain resilient to positive factors amid price fluctuations.

Coinbase Tips Shaky Markets

Coinbase hinted that macro reports pointing to a recession in the United States could impact hopes of an upswing momentum. This could further impact interest rate cuts, which is a bullish catalyst to spark the next run. In a recent market update, Coinbase analysts wrote that the fear of a bigger slowdown will impact digital assets.

“The concern is that cuts may not be bullish for markets if there’s a fear of a bigger slowdown. That is, retail investors will likely be reluctant to enter new stock or crypto positions if the US economy falls into recession. On the other hand, if the economy is still doing relatively well, and the Fed cuts, then that could unlock more liquidity and invite more retail participation.” 

Apart from slowing retail and institutional investors driving funds to risky assets, recent events like the German Bitcoin sales and Mt. Gox creditor’s repayment have affected market sentiments. Coinbase analyst expects a choppy crypto market over the next quarter. This is because of a lack of narratives like in previous quarters. An example is the indecisive sentiments behind spot Ethereum ETFs.

Crypto Bulls Press On

Despite bearish signals from macro factors and recent price fluctuations, crypto holders anticipate positive reactions from rate cuts. This seems to be the case with the recent market jump after the release of the US job data. The US CPI report came in better-than-expected showing yearly inflation dropped to 3%. This led to a price increase in some stocks, crypto assets, and gold. Most traditional investors expect rate cuts as early as September following positive Labour data. 

Also Read: Germany Runs Out of Bitcoin With $3,846 BTC Moved To Flow Traders