Crypto Q4 outlook brightens on improved risk asset sentiment

Bitcoin's recent decline below $65,000 marked the end of a notable September rally, dampening hopes for what is typically the cryptocurrency's best performing month. The cautious trading in the crypto market followed Federal Reserve Chair Jerome Powell's reluctance to implement significant interest rate cuts. To shed light on the current market outlook, Harry Scherzer, CEO of Future Forex, shared insights on Bitcoin's performance over the past months and its correlation with risk assets in a recent interview with CNBC Africa. The CEO reflected on the crypto market's trajectory, pointing out that while September had shown promise due to interest rate cuts, the overall performance over the past six months had been lackluster. Scherzer attributed this decline to unrealistic expectations fueled by factors like the launch of the BlackRock ETF and growing government acceptance. Despite the setback, he remained optimistic about the recent boost in September, albeit below the levels seen in previous months. An interesting observation made during the interview was the shifting perception of Bitcoin from a safe-haven asset to a risk asset. Scherzer drew a parallel with gold's upward trend during times of geopolitical turmoil, contrasting it with the behavior of cryptocurrencies. He highlighted the impact of decreasing interest rates on fostering a risk-on sentiment, likening crypto investments to hot money flowing into high-growth stocks like Tesla. Another intriguing aspect discussed was the influence of political sentiment, with Scherzer noting how statements from influential figures such as former President Donald Trump could sway the crypto market. He speculated that a favorable stance from Trump could lead to a surge in the industry, driven by improved regulations and governmental support. This dynamic underscored the importance of regulatory clarity and political backing in shaping the crypto landscape. Addressing the South African perspective, Scherzer acknowledged a global decline in crypto volumes, attributing it to regulatory challenges and delayed interest rate adjustments. While the price of cryptocurrencies had risen, indicating investor confidence, trading volumes had not seen a corresponding increase. He emphasized the potential for a significant spike in volumes with notable events like a Trump presidency, signaling the market's sensitivity to political developments. Looking ahead to the fourth quarter, Scherzer expressed a bullish outlook for crypto, citing the potential impact of interest rate changes, regulatory measures, and geopolitical factors. He anticipated a positive trend driven by a shift towards a risk-off sentiment globally, positioning cryptocurrencies as attractive investments in such a scenario. In conclusion, Harry Scherzer's assessment of the crypto market outlook for Q4 painted a picture of cautious optimism amid evolving market dynamics. As investors brace for potential regulatory shifts and geopolitical changes, the resilience of cryptocurrencies in navigating these challenges could define their performance in the coming months.