Bitcoin may struggle in Q3 as eyes turn to Ethereum’s ‘catch-up’ — Analysts

The market’s expectation of Bitcoin surging to new highs could prevent it from happening in the near term, but that doesn’t rule out the possibility of Ether surprising investors, analysts say.

Santiment analyst Brian Quinlivan told Cointelegraph on Wednesday that the analytics firm is “seeing an anticipation for Bitcoin's next ‘all-time high’ across social media. Since markets move the opposite direction of retail’s expectations, this usually is a sign that we aren’t quite ready for another bullish surge yet.”

Bitcoin’s “frustrating” close calls may lead to aggressive upswing

Quinlivan suggested the lack of doubt has proven that all-time highs tend not to follow, but with Bitcoin (BTC $109,596) having verged on all-time highs a handful of times now, sentiment has moved into a lower position to propel Bitcoin above its current peak.

Bitcoin is trading at $109,679 at the time of publication, just 2.1% off its $111,970 all-time high, which it reached on May 22, according to CoinMarketCap.

Bitcoin is up 61.32% over the past 12 months. Source: CoinMarketCap

“It wouldn’t be surprising if we do break through very soon after we see a few frustrating ‘close calls’ that cause small traders to turn sour and impatient on BTC, neutralizing this level of optimism,” Quinlivan said. 

The Crypto Fear & Greed Index, which measures overall market sentiment, is reading a “Greed” score of 72 out of 100.

Derive head of research Dr Sean Dawson told Cointelegraph he thinks Bitcoin “will likely underperform” in the third quarter of this year.

Q3 has historically been the worst for Bitcoin

Since 2013, the third quarter of each year has historically been Bitcoin’s weakest, averaging a 6.03% return, while the following quarter has been the strongest, delivering an average return of 85.42%, according to CoinGlass data.

Dawson pointed to macroeconomic uncertainty as a significant concern for traders. “Despite political pressure for rate cuts, the Fed seems poised to keep interest rates steady, which could dampen Bitcoin’s appeal for outsized returns,” he said. 

99.9% of market participants expect the Federal Reserve to keep interest rates the same at 4.25% to 4.50% on June 18, according to CME’s FedWatch tool.

While uncertainty remains about Bitcoin, Quinlivan pointed out the “high level of optimism toward Ethereum.”

“More and more eyes have turned to Ethereum,” he said, adding that the asset has been “playing catch-up since markets began their recovery in mid-April.” Ether (ETH $2,795) reached a low of $1,472 on April 9, but has since recovered to $2,793 by the time of publication, according to CoinMarketCap data.

Ether is still down 21.50% over the past 12 months. Source: CoinMarketCap

“Bitcoin's jump over the past couple of months has, of course, allowed profit redistributions to allow other market caps to achieve. And it really wasn’t clear until ETH was really seeing maximum bearishness a couple of months ago.”

Meanwhile, Dawson said that overall crypto trading volume may decline in the near term, as the arrival of summer in the Northern Hemisphere leads many investors to take vacations.

“This seasonal lull raises the chances of sideways movement or even sharp pullbacks, as traders take profits from earlier gains,” Dawson said.