Crypto price action is expected to remain volatile throughout Q3 2024, according to analysts at Coinbase. David Duong, head of institutional research, and David Han, a market analyst, shared their forecast in the company’s weekly market report. They predict increased volatility for cryptocurrencies over the next couple of months, with a potential rally in the fourth quarter.

JPMorgan analysts have also provided a bullish outlook, albeit on a different timeline, suggesting that crypto markets could rebound in August.

Q3 Began with Challenges

Earlier this year, the crypto market showed a bullish trend, driven by the spot Bitcoin ETF narrative, which saw Bitcoin reach an all-time high above $73,000. However, Q2 faced broader market struggles due to multiple headwinds such as interest rate decisions, miner capitulation, and significant selling by government-controlled wallets, which continued into the third quarter.

“The third quarter started on a sour note with supply overhangs generated by indiscriminate bitcoin selling from price-insensitive sources. That includes the German government’s Bundeskriminalamt (BKA), which began selling their supply of seized bitcoin on June 19,” said the analysts.

Another factor is the uncertainty surrounding Mt. Gox, which analysts believe could be more damaging than the actual selling. “For now, we expect the price action to remain choppy in Q3 2024, as crypto markets still lack strong narratives,” they noted.

Optimistic Outlook for Q4

On a positive note, the SEC’s approval of spot ETH ETFs and recent SOL ETF applications are significant developments. Despite market uncertainty about whether ETH ETF flows will be bullish or bearish, Duong and Han believe the outlook is unlikely to be negative “from a positioning perspective.”

“This could leave room for surprise outperformance and offer ETH more support, even if the flows take time to materialize. Overall, we believe the next two months are likely to produce more volatility before things start to improve more earnestly in late September,” they added.

Looking ahead to the fourth quarter, potential interest rate cuts and the US election in November could substantially impact the market. Fiscal expansion, regardless of the election outcome, could position Bitcoin as a strong buy at current levels, particularly as an alternative to traditional finance.

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