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In a recent conversation, David Duong, Global Head of Investment Research at Coinbase Institutional, shared catalysts that could lead to a parabolic move in crypto.
Duong highlighted the role institutions, Digital Asset Treasuries (DATs) and the recent Fed cuts could play in near-term crypto market behavior, contributing to a parabolic move.
In a tweet, Coinbase indicated that the Fed’s 25 bps cut, in addition to guidance for further easing amid current market conditions, favors a risk-on approach.
Last week, the Federal Reserve approved a quarter-point rate cut, which could be just the start, with the central bank signaling the possibility of two more interest rate reductions in 2025.
In a push for key interest rate cuts, on Monday, Federal Reserve Governor Stephen Miran outlined the reasons why he thinks the central bank's benchmark interest rate is far too high and should be lowered aggressively.
With the Federal Reserve cutting interest rates, industry analysts expect inflows into the markets even if crypto treasuries slow their purchases.
ETH still has momentum
The crypto market saw more than $1.7 billion in liquidations on Monday, triggering a sharp sell-off that sent Bitcoin, Ethereum and other cryptocurrencies plunging.
Ethereum fell nearly 10% to a low of $4,058, with nearly $500 million leveraged long positions liquidated, according to CoinGlass data. ETH currently trades at $4,213, down 7% on the week.
Despite the fall, Coinbase analysts believe ETH might still have momentum, with demand for ETH rising while available supply is tightening.
With ETF flows net-positive and stablecoin supply on Ethereum accelerating, this could indicate the presence of new buying power. Also, 30-day exchange net flows are extremely negative, reducing near-term sell pressure.
The MVRV indicator, which compares ETH’s market value to its on-chain "cost basis," suggests that holders are in profit, but the reading is still below prior blow-off extremes.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team