Bitcoin’s Disappointing Q2: What’s Next for the Crypto Market?

The second quarter of 2024 has come to a close, and it’s been a disappointing one for bitcoin and the broader crypto market. The price of bitcoin has dipped nearly 15% during the quarter, with altcoins faring even worse. But what’s behind this downturn, and what can we expect in the months to come?

A Difficult Quarter

Entering the second quarter, bitcoin was trading just shy of the $71,000 level. However, relentless selling pressure during April and June (interrupted by a May bounce) has seen the price struggle to stay above $60,000. This represents a decline of more than 14% over the quarter.

Bitcoin’s price action over the second quarter

Ether, helped by the tailwind of spot ETF approval, outperformed bitcoin but was still in the red, with a decline of around 5%. The broader CoinDesk Index fell more than 21% during the quarter, dragged down by even larger declines in many altcoins. Solana, in particular, tumbled 30%, while Ripple’s XRP dropped 23% and Dogecoin plunged 42%.

Positive Catalysts Vanish

Bitcoin’s disappointing price action can be seen as a correction within a larger bull move that saw the token rise nearly five-fold from January 2023 lows to a new all-time record above $73,500 in mid-March. Anticipation of spot bitcoin ETF approval, followed by the approval itself, and then massive inflows into the new funds were surely major catalysts for the rise.

However, with ETF inflows now old news and even reversing to outflows, and hopes for lower interest rates diminishing daily, buyers appear to have taken to the sidelines until a new catalyst arises.

More Pain in Store in Q3?

One analyst believes that the price of bitcoin could decline to $55,000 in the near term, citing ten reasons for this potential downturn. These include the fact that bitcoin entered a downtrend on June 20, and that many trend-following funds are looking at the same signals and might be inclined to pile into short positions.

Additionally, while some bulls may have been excited by Donald Trump’s pro-crypto stance, the presidential debate seemed to favor Trump, which could heighten the chance of a replacement Democratic nominee who might end up as a far more formidable opponent in the November election.

Seasonality is also a factor, with the third quarter historically being the weakest one, with an average return of just 5% over the past 13 years. This compares to average returns above 60% in both the second and fourth quarters.

Donald Trump’s pro-crypto stance could be a game-changer for the industry

Solana ETFs: A Potential Game-Changer

However, there is a potential silver lining on the horizon. According to market-making firm GSR, if Donald Trump becomes president again, it could pave the way for the launch of Solana ETFs in the US. This could have a significant impact on the price of Solana, with some estimates suggesting it could more than triple.

GSR notes that Solana is poised for a spot ETF if and when additional spot digital asset ETFs are allowed in the US, and the impact on price may just be the largest yet. The market maker believes that Solana’s price could shoot up nearly ninefold if it sees just 5% of the inflows that bitcoin did following its spot ETF launch.

Solana could be the next big thing in crypto

Crypto Markets to See Selling Pressure in July

JPMorgan has warned that crypto markets are faced with downside risk in July due to potential selling pressure from Mt. Gox creditors. Creditors are set to receive 142,000 bitcoin worth around $9 billion at current prices, and some are expected to dump their tokens as soon as they receive them.

This could lead to a sell-off in crypto markets next month, although JPMorgan notes that markets are expected to rebound in August. Cash payments to creditors of bankrupt crypto exchange FTX, expected some time after October 7, could support markets later in the year.

Mt. Gox creditors could spark a sell-off in crypto markets

In conclusion, the second quarter has been a disappointing one for bitcoin and the broader crypto market. However, with potential catalysts on the horizon, including the launch of Solana ETFs and the repayment of Mt. Gox creditors, the future is far from certain. One thing is for sure, though - the crypto market is never short of surprises.