- In its latest report, cryptocurrency exchange Coinbase delves into why Bitcoin prices have not seen a significant increase recently.
- Coinbase suggests that Bitcoin’s recent weakness is more linked to global markets than any crypto-specific factors.
- Despite the pullback, Coinbase maintains its optimism, citing the historical range of Bitcoin’s maximum drop from its peak.
Coinbase’s latest report explores the reasons behind Bitcoin’s recent price stagnation, suggesting a link to global markets rather than crypto-specific factors.
Bitcoin’s Recent Weakness Linked to Global Markets
In a recent research report, Coinbase pointed out that Bitcoin’s recent weakness is more tied to global markets than any crypto-specific factors. Bitcoin, the world’s largest cryptocurrency, recorded its biggest monthly drop since June 2022, falling by 16% in April. Coinbase noted that both stocks and gold have been trading lower since reaching high levels in mid-April, indicating that Bitcoin’s recent weakness is not exclusive to the crypto markets and does not signal sector-specific capitulation.
Coinbase Maintains Optimism Despite Pullback
Despite the pullback, Coinbase maintains its optimism. Analysts David Han and David Duong wrote, “What makes us optimistic in this pullback is that BTC’s maximum drop from the peak is 23%, which is below the historical range.” The authors believe that the general trend of decreasing declines will continue, partly due to the legitimization of BTC as a macro asset. This situation is reinforced by spot ETFs in the US, Canada, and Europe, as well as recently launched ETFs in Hong Kong and new applications in Australia.
Spot Bitcoin ETFs and Global Regulatory Participation
The report mentioned that while overseas ETF entries are not as significant as those seen in the US, “we believe they represent an important signal for regulatory participation in the asset class globally.” Blackrock’s iShares Bitcoin Trust (IBIT), the largest spot Bitcoin ETF, ended its 70-day entry streak on Wednesday, indicating a slowdown in capital inflow into the asset class through the ETF product. However, Coinbase believes that ETF flows only direct a portion of BTC price discovery, considering the global and highly liquid markets of central exchanges (CEX).
Conclusion
In conclusion, despite the recent pullback in Bitcoin prices, Coinbase maintains its optimism, citing the historical range of Bitcoin’s maximum drop from its peak and the legitimization of BTC as a macro asset. The exchange also highlights the role of ETF flows and global regulatory participation in the asset class, suggesting that these factors will continue to influence Bitcoin’s price discovery in the future.
