This will determine what happens next with Crypto, according to Coinbase’s Head of Institutional Research
A top executive at US-based crypto giant Coinbase cites several factors that could determine the performance of crypto markets in the coming months.
In a new interview with crypto analyst Scott Melker, Coinbase’s head of institutional research, David Duong, says the crypto markets remain tied to the Federal Reserve’s monetary policy.
“A lot of our investment work is still kind of dependent on what we get in terms of trying to play central at the Fed. I actually spend about 30% of the time just trying to pay attention to understanding what’s going on with inflation, because the more it looks like it has peaked, of course the better the investment case.”
Looking closer at the Fed, Duong says the agency’s activities starting next month portend more corrective moves for crypto markets heading into Q4.
“The Fed’s balance sheet, for example, is going to start actually shrinking at a faster pace starting in September. The cost in terms of what the net income that the Fed is actually receiving from that balance sheet is going to be negative in the months ahead. UST GA ( The US Treasury General Account) balance is actually going to start rising.
All of this unfortunately argues for a more negative medium-term outlook for risk assets, not just crypto, but all risk assets.
After the big recovery we’ve seen this summer, which has arguably occurred under some lower liquidity conditions, I think there’s still value in being a bit cautious as we head into Q3.”
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