As we all know, the crypto correction has been rough, with the entire altcoin market cap down about 41% since December. This recent downturn is an indication of a broader cooling trend in the digital asset space. Looking ahead to the third quarter at least, Coinbase analysts are hopeful that a rebound could already be on the horizon.
The recent market collapse has chopped the altcoin market cap by more than half from its high of $1.6 trillion. It now sits at over $950 billion. This $67 billion drop represents a major reversal in the tale of investor confidence and the prevailing climate of the market.
Market Analysis and Trends
Given the importance of bitcoin’s performance, it provides further clues to where the overall market is headed. Looking at the 200-day moving average, the peak-to-trough fall of Bitcoin was an enormous 76% from the November 2021 high to the November 2022 low.
Interestingly, when adjusted for risk, this decline mirrors the S&P 500's 22% drop, suggesting broader macroeconomic factors are at play. Coinbase’s short-term analysis found that their model was able to predict the end of the last bull run back in late February. Since then, the model has remained an independent neutral.
One thing to keep in mind is that the model’s responsiveness may be slow during times of volatility and fast market transition. That lag indicates that current sentiment is relatively neutral, though the environment is still highly fluid and subject to rapid change.
Coinbase's Perspective on Market Correction
In spite of today’s harsh market conditions, Coinbase believes these pullbacks are a positive, organic aspect of the market cycle. Since then, the COIN50 index has moved back below the 200-day moving average, confirming that strength was short-lived. Together, these shifts produce historic opportunities for thoughtful, strategic investment III.
As noted in Coinbase’s April 2024 Monthly Outlook, the bad news is the data continues to support a major crypto market cooldown. With this perspective, though Q2 may be rocky, Q3 may have a silver lining.
Potential Rebound in Q3
According to Coinbase’s crypto market outlook, the digital asset market could soon bounce back before the year ends. The total market cap has fallen 41% from its all-time high in December. This drop likely indicates that the crypto market is officially in bear territory.
This correction may provide an opportunity to lay a foundation for increased growth and investment in the months ahead. Fintech investors are understandably optimistic about a continued Q3 rebound. This excitement highlights what they’ve had to endure to make it to their current success in the challenging market.
