A strong start to 2024 had bulls predicting $100,000 bitcoin {{BTC}} at some point this year, but relentless selling pressure in April and June (interrupted by a rebound in May) has left the price struggling to avoid falling below $60,000 as the quarter draws to a close.
At the start of Q2, Bitcoin was trading just below the $71,000 level and at press time (about 60 hours before the official Q2 close) it was changing hands at $60,800, down over 14%. Aided by the tailwind of what now appears to be a surefire spot ETF endorsement, Ether {{ETH}} outperformed, but was still in the red in Q2 with a decline of about 5%.
Pulled down by even bigger declines in many altcoins, the CoinDesk Index The index has fallen more than 21% in the past three months. Among the moving stocks, Solana {{SOL}} fell 30%, Ripple {{XRP}} fell 23%, and Dogecoin {{DOGE}} plunged 42%. The best performer in the index was the aforementioned ether with its 5% decline.
Positive catalysts disappear
Bitcoin’s disappointing price performance in Q2, for now, can possibly be seen as a correction within a broader bullish move that has seen the token surge nearly fivefold from the January 2023 low to hit a new all-time high above $73,500 in mid-March this year.
Anticipation of the Bitcoin ETF spot approval, and then approval, and then massive inflows into the new funds were surely major catalysts for the rally. Macroeconomic factors also played a role, including anticipation of a major round of interest rate cuts from the US Federal Reserve in 2024. However, inflation has failed to cooperate, and so far there has been no easing of monetary policy in the US, with several central bankers not expecting to cut rates even once this year.
As ETF inflows sometimes even turn into outflows, and hopes for lower interest rates dwindle daily, buyers appear to have been sidelined until a new catalyst arises .
More suffering in the offing in the third trimester?
Bitcoin entered a downtrend on June 20, writes Markus Thielen of 10X Research, giving ten 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 inclined to accumulate short positions.
Additionally, while some bulls may have been pleased that the presidential debate appeared to favor Donald Trump — who has recently been particularly pro-crypto and pro-bitcoin — Thielen suggested that President Biden’s poor performance increased the odds of a Democratic replacement who could end up being a much more formidable opponent in the November election.
Thielen also pointed to seasonality. The third quarter has historically been the weakest, with an average return of just 5% over the past 13 years. By comparison, average returns have exceeded 60% in the second and fourth quarters.
