David Duong pointed out two catalysts that could trigger a parabolic move in the crypto market
He indicates that these Fed rate cuts will make borrowing cheaper in crypto with easy access
Duong also emphasized that the growth of institutional investors and companies holding digital assets as part of their treasury.
David Duong, Global Head of Investment Research at Coinbase Institutional, recently pointed out two catalysts that could trigger a parabolic move in the crypto market. He outlines a crypto market scenario with macroeconomic conditions and rising institutional participation, demonstrating how these two factors can make a sharp change in price.
Two Catalysts: Fed rate Cut & Institutional Growth
Duong says macro factors like potential Federal Reserve rate cuts and stable monetary policy could create a supportive environment for risk assets like Bitcoin and Ethereum. He indicates that these rate cuts will make borrowing cheaper in crypto with easy access and also increase capital in the country’s economy. But he was also quick to mention that if the Fed continues to make consecutive cuts, then there might be a risk scenario for crypto.
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Duong said, “I think Fed cuts are so important because I’m more interested in direction. You don’t get a down market when the Fed starts cutting rates again. And they don’t stop with just one cut; they will do consecutive cuts. So, now I think we’re completely in a risk environment based on what the Fed has done.”
Other than this, Duong also emphasized that the growth of institutional investors and companies holding digital assets as part of their treasury.
Can Growing Institutional Activity Change Crypto Outlook?
Duong believes the rising interest among institutions can also boost the buying power and stability of the crypto market. He reiterated the role of digital asset treasuries (DAT) and an AI firm that potentially fuels the price surge of crypto. Moreover, he agrees there are potential risks in this aspect, but despite that, he confirms that it will shift the crypto market.
He said, “I think institutions are definitely going to play a big role here… I still strongly believe that institutions are really going to drive this cycle. And it’s the DAT’s sure, but I would say that even when we’re looking at what’s happening outside of our space, like the AI-fueled datacenter investments, for example.”
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FAQs
Rate cuts lower borrowing costs and increase market liquidity, making riskier assets like cryptocurrency more attractive to investors seeking higher returns.
Institutional involvement brings significant capital, enhances market stability, and legitimizes digital assets as a new class for corporate treasuries and investments.
A DAT is when a company or institution holds cryptocurrencies like Bitcoin on its balance sheet as a treasury reserve asset, similar to holding cash or gold.
Analysis suggests that if the Fed begins a cycle of consecutive rate cuts, it would signal a strong risk-on environment, which is typically bullish for crypto markets.
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