Warning Issued by Coinbase Executive Who Claims Macro Factors Pose Serious Danger to the Crypto Markets

Coinbase, the largest cryptocurrency exchange in the United States, has issued a warning after hearing from one of their executives that macroeconomic issues are creating headwinds for markets.

David Duong, head of institutional research at Coinbase, recently discussed the potential negative effects of a strengthening US currency and the generally hawkish posture of central banks throughout the globe in an interview with Scott Melker.

“The dollar has rebounded off its level from roughly a week and a half ago, so I might actually want to be very defensive in this very short term,” the investor said.

“That’s a huge issue for the cryptocurrency market, even if some of it is seasonal. We’re in the denominator when it comes to the US dollar, so I expect that and the interest rate differentials to play a major role this week when we hear from the Federal Reserve (FED), which may or may not declare this is the final [interest rate rise].”

“I’m not sure whether the European Central Bank (ECB) can really raise interest rates given the recent negative economic statistics seen in the Purchasing Managers’ Index (PMI).

If the interest rate differentials we’re dealing with are indicative of the fact that Japan is extremely reluctant to adopt a hawkish posture and move away from yield curve management, then the dollar may actually stay stronger for longer in this trend, which does not make me feel comfortable with crypto at the present time.”

As the Mt. Gox settlements conclude and investors anticipate next year’s halving of Bitcoin (BTC), Duong predicts that the trading climate for digital assets will improve in the second half of 2023.

“As we get farther into the second part of the year, I anticipate a more favourable climate. The Mt. Gox distributions and payments should be finalised by then, and the halving will become a topic of serious discussion.”

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