Grayscale Investments has forecasted a potential retest of Bitcoin’s all-time highs by the end of 2024, contingent on the U.S. economy avoiding a recession. This outlook follows a sharp downturn in the Bitcoin market earlier this week, driven by concerns over the U.S. economic outlook and increased market volatility.
Ethereum, in particular, has underperformed, likely due to heightened futures market activity and selling pressure from large holders.Despite these market challenges, Grayscale remains optimistic. The firm suggests that if the U.S. economy continues toward a “soft landing,” cryptocurrency valuations could rebound.
Even in a weaker economic scenario, Grayscale believes the downside risk for crypto may be more contained compared to past downturns.The recent market contraction was primarily triggered by a disappointing U.S. employment report for July, released on August 2.
Bitcoin Faces Recession Fears
The report showed an increase in the unemployment rate, raising fears of a potential recession. This led to a decline in cyclical assets like equities, while traditional safe-haven assets such as U.S. Treasury bonds, the Japanese Yen, and the Swiss Franc saw increased demand.
Bitcoin and Ethereum both saw significant declines, with Ethereum’s price dropping 7.6% within a three-minute window on August 4, resulting in $340 million in liquidations. Contributing factors included selling pressure from major holders like Jump Crypto and Paradigm, as well as changes in Ethereum’s staking reward rate and validator activity.
Grayscale noted a decrease in U.S. equity market volatility as broader financial markets stabilized. The firm’s outlook suggests that if the U.S. avoids a recession and follows a path of controlled economic slowdown, Bitcoin could potentially retest its all-time high.
Factors such as steady demand from newly listed U.S. ETFs, limited credit exposure from financial institutions, and subdued altcoin returns could support market stability.
In parallel, market analyst CryptoCon pointed to the 3.618 Fibonacci extension as a key indicator, suggesting Bitcoin could surpass the $100,000 mark by year’s end if current trends continue. However, Bitcoin is currently struggling to maintain consolidation above the $60,000 level, trading at $59,970.
