Bitcoin, Crypto Downturn Possible in Q2-Q3: Analyst Elja

Crypto investor and Forbes 40U40 honoree Elja took to Twitter and outlined factors that could lead to a decline in Bitcoin and cryptocurrency prices in the coming months.

Elja pointed to the conclusion of the Federal Reserve’s Bank Term Funding Program (BTFP) as a reason which could cause reduced liquidity in the cryptocurrency market. Established in response to bank failures in 2023, the BTFP’s halt on issuing new loans could restrict the easy flow of capital.

Additionally, Elja noted there are very less expectations of a Federal Reserve interest rate cut by June. Recent inflation data and comments by Fed Chair Jerome Powell suggest interest rates might remain steady or even increase. This dampens the investor enthusiasm for riskier assets like cryptocurrency.

Elja also cited a slowdown in inflows to cryptocurrency exchange-traded funds (ETFs) as a possible indicator of warning institutional interest in the sector.The ongoing conflict between Iran and Israel presents another layer of uncertainty that could negatively impact cryptocurrency markets, according to Elja.

Despite these bearish factors the analyst expressed a long-term bullish outlook on Bitcoin and cryptocurrencies. The analyst himself anticipates a period of sideways price movement in the immediate future. Quoting to this he said,

I’m not bearish on BTC and crypto, but I wouldn’t mind a few months of sideways action after 7 consecutive months.

Finally, Elja highlighted Bitcoin’s historical trend of underperformance in the second and third quarters. The upcoming Bitcoin halving which increases the difficulty and cost of mining could pressure miners into selling their holdings to maintain profitability.