Macro crypto currency market outlook

Bitcoin has entered a period of correction following the March surge to a fresh record high beyond $70k. The market is in the process of seeking out a higher low ahead of the next major upside extension and bullish continuation towards $100k. As far as setbacks go, April’s bearish reversal formation opens the door for the possibility of a deeper drop in May towards $50k. The extent of any weakness below $50k should be short-lived and exceptionally well supported, with $40k now seen as a longer-term floor.

A string of seven consecutive constructive months for bitcoin and ether could not extend to eight in April, with the market finally entering a period of cool down after an impressive run. Bitcoin closed the month down 15%, while ether closed the month down 17%. Looking back, we believe there were four primary drivers of the April weakness, none of which should have any lasting negative impact going forward.

The first was a natural flow of profit taking after bitcoin had been running hot for much of 2024, extending to yet another record high. The second was a ‘selling of the news’ on the bitcoin halving event. Naturally, there was a lot of buildup in excitement around the halving event. So once fully priced and confirmed, the balance of risk favored a period of pullback. The third was a normalization of activity in the bitcoin ETFs after an explosive launch in Q1. The final driver came from all things global macro. Specifically, we saw a meaningful repricing of Fed expectations, with rate cut bets scaled back and yield differentials moving in the US Dollar’s favor, which by extension, weighed on crypto assets.

Looking ahead, we expect the pullback we’ve been seeing to be short lived and will be looking for bitcoin to find a higher low in Q2 2024 ahead of the next major upside extension and bullish continuation. We suspect there will be more attention around updates relating to the SEC approval of ETH spot ETFs. We continue to expect global macro forces and sentiment towards the US Dollar and rates to also play a role. Overall, the outlook remains bright with the crypto market continuing to scale up and traditional market participants continuing to adopt the technology and increase exposure.