‘Limited upside’ for Bitcoin? Here’s what Coinbase is predicting!

• Bitcoin could extend its price range in the short-term 
• Coinbase analysts cited slow Fed rate cut path and increasing BTC sell pressure

Coinbase analysts have cautioned that Bitcoin [BTC] could see market choppiness in the medium term.

In their weekly commentary, analysts David Duong and David Han cited the slow Fed rate cut path and increasing BTC supply in the market. 

“The broader macroeconomic backdrop remains a mixed bag. The reduced likelihood of Fed rate cuts on the back of stronger employment data and inflation risks may temper risk asset performance in the short to medium term.” 

Recent U.S economic data revealed sticky inflation and strong labor markets, further diminishing expectations of more Fed rate cuts.

In fact, traders have been pricing the Fed to keep the rate unchanged at 4.25%-4.50% for the next FOMC meeting scheduled for the end of January. 

Source: CME

BTC sell pressure soars

The analysts added that a surge in BTC supply could further cap strong upside momentum on the charts. 

“We think bitcoin’s supply side story may also temper some upside expectations in the near term. The active supply of BTC (moved onchain in the past three months) has spiked to 4.6M, up from 2.7M in October 2024.”

Source: Coinbase

The report stated that nearly $90 billion worth of BTC has been liquidated by long-term holders (LTH), marking the $100k level as a key supply zone for early investors. According to the analysts, this LTH supply pressure could constrict BTC into a price range. 

“These supply-side dynamics suggest there could be a period of grinding consolidation for bitcoin in the coming months similar to the onchain signals we observed when bitcoin breached all-time-highs in March 2024”

In the meantime, BTC swept the range lows and bounced, but the recovery stalled at $95k. This reinforced the $90k-$100k consolidation range mentioned by the analysts. 

Source: BTC/USDT, TradingView