A new report from Coinbase has revealed that October’s seismic market sell-off is a prelude to medium-term strength for cryptocurrency prices. As prices recover, Coinbase analysts have identified a streak of capital rotation from Solana (SOL) and BNB Chain (BNB) to Ethereum (ETH) and Arbitrum.
October’s Sell-off Indicates Significant Upsides For Cryptocurrencies
Analysts at Coinbase have forecasted a string of positives for the cryptocurrency market, downplaying claims that the October 10 crypto crash signaled the end of the bull run. In an analytical note for institutional investors, the analysts described the largest liquidation in crypto’s history as a “market reset” necessary for the next leg up.
According to the report, the liquidation event restored the market to “structurally healthier leverage levels,” after exposing key fundamental issues. Right off the bat, the liquidation cascade unveiled challenges with collateral standards and pricing sources in the ecosystem.
For Coinbase, institutional investors will drive the next bull run for cryptocurrencies, as they were largely insulated from the deleveraging event. While full market stabilization may be several months away, the report predicted a “gradual grind up” rather than a sudden rally to new all-time highs for cryptocurrency prices.
With institutional players leading the resurgence, Coinbase analysts have forecasted an increase in Bitcoin dominance in Q4. At press time, Bitcoin’s dominance stands at 59.2%, with the top cryptocurrency threatening to sink below the $100,000 mark one month after the October liquidation event.
For altcoins, the report highlighted a capital rotation from Solana and BNB Chain toward EVM stacks like Ethereum and Arbitrum. On-chain data indicates that the duo of Ethereum and Arbitrum is leading other chains on 7-day net smart money inflows, with yield protocols racking up impressive numbers.
Macroeconomic Factors To Play Major Roles In Price Direction
Despite the glowing on-chain data, analysts at Coinbase have warned investors of the needle-moving effects of macroeconomic factors. The report highlighted the impact of trade tensions from Donald Trump’s tariffs, geopolitical conflicts in Eastern Europe, and soaring fiscal deficits.
In the US, back-to-back interest rate cuts have bolstered cryptocurrency prices, defying the impact of the October 10 black swan event. Meanwhile, a plan by US President Donald Trump to issue at least $2,000 in tariff dividends to US citizens has jolted crypto prices with BTC, ETH, XRP, and SOL racking impressive rallies over the last day.
Source: https://zycrypto.com/coinbase-says-octobers-sell-off-was-not-the-end-of-the-cycle-warns-of-macro-risks/
