A new report from Coinbase Research claims that macroeconomic pressures are weighing heavily on the crypto market. Analysts expect the market to remain vulnerable in the coming weeks as there are simply too few catalysts to push the price higher. This is making many investors nervous as conditions change globally.

Coinbase: Macro Factors Play a Role

Coinbase’s report underscored the crypto market’s increasing dependence on broader economic events. In this regard, the Bank of Japan’s decision to hike interest rates last week is tied to the unwinding of yen carry trades that have sent ripples through global markets.

Furthermore, renewed geopolitical tensions in the Middle East seem to be raising concerns about oil supplies, further muddying the waters. These are not theoretical macro pressures; they are nonetheless important for investor sentiment and market stability.

According to Coinbase analysts, leverage within on-chain spot markets has fallen sharply, which could also mean that the recent large drop has made investors more cautious.

They believe that since there are no immediate catalysts, crypto price movements in the short term will still be dominated by macroeconomic factors.

Total crypto market cap at $2.08 trillion on the daily chart: TradingView.com

Q3 Strategies

Looking ahead, Coinbase is entering Q3 2024 with a cautious stance. The company’s outlook was based on the next data prints for US inflation, which could influence the temperament of the markets.

When the number comes out, it could either boost confidence or continue to disappoint crypto investors. In the absence of positive news or developments regarding crypto, it can be difficult to generate price momentum.

Analysts are not all pessimistic, however. There could be a recovery in token valuations in the event of a recovery in the US economy, they said.

They even speculated that Bitcoin could reach its all-time high later this year if macro conditions stabilize. This divergence in outlook reflects the uncertainty currently surrounding the crypto market.

The way forward for investors

To trade effectively in the current crypto landscape, it is important for investors to pay close attention to the interplay between macroeconomic factors and market dynamics.

Anyone can easily notice that this correlation already exists between cryptocurrencies and traditional financial markets. This has been evident ever since institutional investors entered the market.

As the market matures, it is important for investors to realize that cryptocurrencies are no longer isolated assets but are driven by larger economic trends.

Main image from Pixabay, chart from TradingView