By Julie Fernandez, Senior Financial Analyst at Triangle Profits
As we approach the end of 2024, the cryptocurrency market remains a complex landscape, marked by significant uncertainty. Bitcoin (BTC), once the dominant player, seems to be losing traction. Analysts have noted a steady decline in BTC’s active addresses, signalling decreased network activity, a trend typically observed during post-peak periods. This phenomenon, coupled with declining miner profits and outflows from exchange-traded funds (ETFs), has raised concerns that Bitcoin’s upside potential may be limited in the near term.
Bitcoin’s Struggle: A Perfect Storm of Factors
Several macroeconomic factors have converged to weigh heavily on Bitcoin. Chief among them is the impending interest rate decision by the U.S. Federal Reserve. While lower interest rates traditionally boost riskier assets like Bitcoin, analysts are cautioning that this time might be different. A long-awaited Fed rate cut could actually push Bitcoin down by 15-20%, as traders brace for a potentially volatile September.
Historically, September has been a tough month for Bitcoin, and with miner profitability nearing all-time lows, the pressure is mounting.
Adding to the bearish sentiment, Bitcoin’s active address count—a key metric for gauging market health—has plummeted throughout 2024. This decline suggests that investors are either holding their assets in cold storage or moving to other investment vehicles like ETFs. Analysts have warned that while Bitcoin’s adoption by institutional investors continues, the retail enthusiasm that once drove its price higher may be waning.
While Bitcoin’s performance leaves much to be desired, altcoins appear to be on the verge of a breakout. In particular, the last quarter of the year is typically favourable for altcoins, which tend to surge as global liquidity conditions improve. Analysts are now watching the likes of Chain-link (LINK) and AAVE, which have shown signs of life after significant corrections in the first half of the year.
In the short term, the spotlight remains on Bitcoin’s ability to withstand economic headwinds. A decline to the $40,000-$50,000 range could materialize if the Federal Reserve opts for aggressive rate cuts.
