Since March 2024, the cryptocurrency market has experienced a notable downturn, with bitcoin (BTCUSD) losing 20-30% of its value and many altcoins losing up to 50-70%, back to levels last seen in June 2022. This drop has caused concern among investors, especially those who bought at the March highs, leading to questions about the long-term viability of cryptocurrencies as an investment asset.

However, according to FreshForex analysts, this correction is not unusual and fits into typical market cycles. While this downturn may seem alarming, several influential factors suggest that a market recovery may be on the horizon, especially in the second half of 2024.

One of the key factors currently shaping the cryptocurrency market is the U.S. presidential election in 2024. Both leading candidates have incorporated blockchain technology and cryptocurrencies into their campaign discussions, creating a favorable political backdrop for the sector. As politicians continue to discuss the future of cryptocurrency and pledge support for blockchain, this could lead to increased attention from both retail and institutional investors. This renewed interest could serve as a catalyst for market growth, with political momentum possibly driving demand for digital assets.

Another important factor influencing the potential for cryptocurrency market recovery is the U.S. Federal Reserve's decision to lower interest rates. On September 18, 2024, the Fed lowered its key rate to a range of 4.75-5%. This marked the first rate cut since the pandemic began in 2020. As interest rates fall, traditional financial instruments such as bonds become less attractive to investors due to lower yields. In such an environment, investors often turn to higher-yielding assets, including cryptocurrencies, as a way to generate higher returns.

Historically, Bitcoin halving events, when the rewards for mining new blocks are halved, have had a significant impact on the price. The last halving event occurred in April 2024, and while its effects are not immediate, they usually manifest themselves within 5-8 months. FreshForex analysts suggest that Bitcoin could surpass previous highs by the fourth quarter of 2024 as the supply shortage caused by the halving spurs demand. This, in turn, could lead to the rise of other cryptocurrencies.

Despite the recent decline, FreshForex analysts maintain an optimistic outlook, citing macroeconomic factors, political support and bitcoin halving as key drivers of potential growth. They believe that the current market correction offers a strategic entry point for investors.

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