• The crypto market has seen a 50% increase in its overall market capitalization, reaching $1.13 trillion on Aug 14.
• Goldman Sachs Group&Co. anticipate a series of interest rate cuts as soon as Q2 2024, with gradual pace of reductions from that point.
• Interest rate cuts and more liquidity on the market might contribute to a bullish 2024 in the crypto sector.
Crypto Market Performance Year-to-Date
The crypto market gave a choppy performance year-to-date but managed a 50% increase in its overall market capitalization, reaching $1.13 trillion on Aug 14. Total crypto valuation Source: TradingView.com
Interest Rate Cuts in Q2 2024
As previously reported , the Federal Reserve has battled ballooning inflation throughout 2022 and 2023, raising interest rates in 11 separate revisions. Once inflation drops to the Fed’s desired level of 2%, it offsets the risks by implementing a series of interest rate cuts to avoid recession and ensure gross domestic product (GDP) growth. Economists of US financial giant Goldman Sachs Group&Co., including Jan Hatzius and David Mericle, anticipate a series of interest rate cuts as soon as Q2 2024, with gradual pace of reductions from that point. Despite the low correlation with equities, Bitcoin and the crypto sector overall might respond negatively to the liquidity crunch in 2023 — so interest rate cuts may help reverse this effect and contribute to a bullish outlook for 2024 in the crypto space.
Bitcoin & Ethereum Holdings On Exchanges
The amount of Bitcoin and Ethereum stored on exchanges continues to decline — suggesting traders are becoming more confident about holding their coins off exchanges for longer periods which is generally considered safer than leaving funds on exchanges due to their higher susceptibility to hacking attacks or other malicious activities like phishing scams or spoofing attempts.
Impact Of Bitcoin Halving In April 2024
The upcoming halving event scheduled for April 2024 is expected to reduce mining rewards from 12 BTC per block mined down to 6 BTC per block mined — thus further reducing supply while increasing demand from investors who see this event as an opportunity for price appreciation over time due to limited supply with increased demand pushing prices upwards over time (which is known as ‘scarcity’). This could potentially initiate another fresh rally within the cryptomarket when combined with other factors such as additional regulatory clarity or global economic factors such as low inflationary pressure leading up towards that date range..
Overall Outlook For Crypto Market In 2024
Overall prospects remain bullish for cryptocurrency markets going into 2024 — despite potential risks posed by rising inflationary pressures brought about by loose fiscal policies implemented during 2021/2022 — due mainly to projected federal reserve actions such as interest rate cuts coming up around Q4 2023/Q1 2024 alongside reduced holdings of Bitcoin & Ethereum on exchanges being held off exchange wallets which increases safety & security for investors wanting exposure within this space long term