An executive at the top US crypto exchange Coinbase is issuing a warning, saying that macroeconomic factors are creating headwinds for markets in the short term.
In a new interview with Scott Melker, David Duong, Coinbase’s head of institutional research, says that the rising strength of the US dollar and the relatively hawkish stance of central banks around the world could negatively impact the crypto markets in the near future.
“I might actually want to be very defensive in this very short term, particularly [because] the dollar has now bounced off, it’s kind of level, about maybe a week and a half ago…
And part of that is seasonal for sure, but that’s a big deal for crypto. We sit as the numerator to the USD, so I think there’s that plus the interest rate differentials are going to factor in huge, probably this week, because we’re gonna hear from the Federal Reserve (FED) who may or may not say this is the last [interest rate hike].
The European Central Bank (ECB) is saying that they want to hike, but the Purchasing Manager’s Index (PMI) numbers that just came out, weak economic data, [so] I don’t know if they can do that…
Japan is very unwilling to take a hawkish position and move away from yield curve control, so if that’s kind of the interest rate differentials we’re working with, the dollar can actually remain stronger for longer in this trend, which doesn’t make me feel comfortable with crypto at the moment.”
However, according to Duong, the further we get into the second half of 2023, the better the trading environment should become for digital assets as the Mt. Gox settlements finish up and investors start looking forward to Bitcoin’s (BTC) upcoming halving next year.
“I think that we’re probably going to get a better environment as we get further into the second half of the year. I think by that point the Mt. Gox distributions, those payments are going to be done, [and] people will start talking about the halving in earnest.”
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