What are the possible catalysts for the decline in Bitcoin in Q2 mentioned in the articles?

What are the possible catalysts for the decline in Bitcoin in Q2 mentioned in the articles?

Bitcoin’s Bleak Q2: A Catalyst-Less Descent

Bitcoin’s audacious start to 2024, promising to reach the coveted $100,000 mark, has been replaced by a quarter of relentless selling pressure. As Q2 draws to a close, the king of cryptocurrencies is hovering near $60,000, marking a disheartening 14% decline since the start of the quarter.

Positive Catalysts Disappear

The anticipation of a spot bitcoin ETF approval, coupled with the influx of funds into these products, provided a major boost to Bitcoin’s price in the first half of the year. However, the buzz around this catalyst has faded, and inflows have even reversed at times.

Meanwhile, hopes of interest rate cuts from the US Federal Reserve, which would typically boost risk assets like crypto, have diminished. Inflation remains a stubborn concern, prompting some policymakers to abandon their plans for any rate reductions this year.

Seasonality and Political Uncertainty

Seasonality has also played a role in Bitcoin’s recent woes. Q3 has historically been a weak period for cryptocurrencies, with an average return of just 5% over the past 13 years.

Adding to the uncertainty is the upcoming US presidential election. According to analyst Markus Thielen of 10X Research, President Biden’s poor performance in the recent debate could increase the chances of a more formidable Democratic nominee. This political uncertainty could further dampen investor sentiment towards risky assets like Bitcoin.

More Pain to Come in Q3?

Thielen paints a pessimistic picture for Bitcoin’s immediate future, citing several reasons why it could plunge to $55,000 in the near term. He highlights the influx of trend-following funds that are likely to pile into short positions, signaling a bearish sentiment among investors.

Despite the negative headwinds, it’s important to remember that Bitcoin has faced similar setbacks in the past and emerged stronger. Whether it can do so again remains to be seen, but investors should brace themselves for the possibility of further declines in the coming months.

By Deepika

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