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Lisa Cantin
Lisa Cantin

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Bitcoin and Ethereum Close Out Lackluster Q2 as Analysts Warn of More Pain Ahead

According to the latest crypto news, Bitcoin and Ethereum are closing out a lackluster second quarter of 2024, with one analyst believing more pain could be in store for the leading cryptocurrencies.

Despite the buzz around the launch of Bitcoin and Ethereum spot ETFs in the U.S., the digital asset market has seen mixed performance in Q2 2024. While traditional assets like stocks have outperformed, the crypto market has remained range-bound and struggled to gain momentum.

Broker Canaccord Genuity attributes this to a few key factors. First, regulatory headwinds and macroeconomic uncertainty have weighed on the crypto space . The ongoing lawsuit between the SEC and Binance, as well as the broader regulatory crackdown, have created an uncertain environment for the industry.

Additionally, there are concerns that the market may be due for a mid-bull market pullback around the Bitcoin halving event, which is projected to occur on April 19, 2024 . Historically, Bitcoin has seen 30-50% drawdowns around these halving events, as the reduction in new supply can lead to volatility . With sentiment running high ahead of the halving, another significant correction could be on the cards.

The FOREX.com report suggests that tighter-than-expected monetary policy from central banks could also contribute to a potential Bitcoin and Ethereum retreat before a recovery . If the widely anticipated "pivot" to interest rate cuts is delayed due to persistent inflation, it could create a more challenging environment for risk assets like cryptocurrencies.

Despite the near-term headwinds, the long-term outlook for Bitcoin and Ethereum remains positive, according to the analysts. The approval of spot Bitcoin and Ethereum ETFs is seen as a significant development that could drive increased institutional adoption and investment in the asset class . Over 50% of the world's largest hedge funds are now trading or holding spot Bitcoin ETFs, and the SEC may soon approve spot Bitcoin ETF options.

Furthermore, the maturation of the crypto ecosystem, with advancements in Layer 2 solutions and the potential for a "killer app" to drive mainstream adoption, is viewed as a positive long-term trend . The launch of DeFi project EigenLayer, which has already surpassed $20 billion in total value locked, is one example of the ongoing innovation in the space .

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Chris

Regulatory issues and macroeconomic uncertainty are significant hurdles. Do you think the potential mid-bull market pullback around the upcoming Bitcoin halving will impact their recovery?