BTC is now valued at $109,679. It’s only 2.1% off from its record high of $111,970, achieved on May 22. Yet even with this stellar performance, analysts are warning that Bitcoin could be in for a tough quarter three. Traditionally, this stretch has been Bitcoin’s weakest, and with Ethereum increasingly catching on as investors look for new opportunities.
Historical Performance and Future Predictions
This is the case for Bitcoin’s third quarter as well, which has historically been the weakest performing quarter, with an average return of just 6.03% since 2013. The next quarter has been its best, providing an average return of 85.42%. If this historical trend is any guide, that could mean a major slowdown ahead for Bitcoin in the next several months.
Dr. Sean Dawson, head of research at Derive, expected Bitcoin to underperform this third quarter. On that very performance, he believes it will be disappointing. On top of recently reported supply chain worries, he identified macroeconomic uncertainty as a big worry among traders in the market. Despite political pressure for rate cuts, the Federal Reserve's likely decision to maintain steady interest rates could diminish Bitcoin's appeal for outsized returns.
"Despite political pressure for rate cuts, the Fed seems poised to keep interest rates steady, which could dampen Bitcoin’s appeal for outsized returns" - Dr Sean Dawson
Market Dynamics and Profit Redistribution
With Bitcoin reaching new highs, profits have been soaring all around. Indeed, this trend is an indication that investors are increasingly diversifying their investments within the cryptocurrency market. Santiment analyst Brian Quinlivan pointed out "an anticipation for Bitcoin's next ‘all-time high’ across social media." This prevalent expectation should be a warning sign to proceed with caution.
"seeing an anticipation for Bitcoin's next ‘all-time high’ across social media. Since markets move the opposite direction of retail’s expectations, this usually is a sign that we aren’t quite ready for another bullish surge yet" - Brian Quinlivan
Quinlivan suggests that a breakthrough to a new all-time high might occur after frustrating close calls that cause impatience among small traders, neutralizing the current optimism. He noted that the crypto trading landscape has likely gotten quieter more broadly in the near term with summer vacations, etc. Even with these possible obstacles, Bitwise analysts calculate Bitcoin’s fair value might be as high as $230,000.
Ethereum's Growing Appeal
Most recently, Ethereum has been stealing the show, with Quinlivan reporting a current “high level of optimism toward Ethereum.” Ethereum has been "playing catch-up since markets began their recovery in mid-April," presenting an alternative focus for investors.
"More and more eyes have turned to Ethereum" - Quinlivan
According to Dr. Sean Dawson, an increasing number of investors are looking at Ethereum, adding a new asset class to their traditional Bitcoin-heavy portfolios. Ethereum is currently undergoing a massive transition and introduction of upgrades. This positive news has the potential to increase short term interest and improve Bitcoin’s market dominance.
