A senior executive at US crypto giant Coinbase names several factors that could determine the performance of crypto markets in the coming months.
In a new interview with crypto analyst Scott Melker, Coinbase Head of Institutional Research David Duong said that crypto markets are still beholden to the Federal Reserve’s monetary policies.
“A lot of our investment thesis still hinges on what we get from trying to play the Fed pivot. In fact, I spend about 30% of the time trying to figure out what’s going on with inflation, because the more it looks like it’s peaked, the better the investment thesis obviously. »
Taking a closer look at the Fed, Duong says the agency’s activities from next month portend more corrective moves for crypto markets towards the fourth quarter.
“The Fed’s balance sheet, for example, is going to start shrinking at a faster rate starting in September. The cost in terms of net income that the Fed actually receives from this balance sheet will turn negative in the coming months. The balance of the UST GA (US Treasury General Account) will actually start to increase.
All of this, unfortunately, argues for a more negative mid-term outlook when it comes to risk assets, not just crypto but all risk assets.
After the sharp rise we’ve seen this summer, which no doubt occurred under weaker liquidity conditions, I think it’s still worth having a bit of caution heading into the third quarter.
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