Bitcoin (BTC)'s recent weakness is not unique to the crypto market and therefore does not indicate a sector-specific capitulation, Coinbase (COIN) said in a research report on Friday.
Coinbase notes that both stocks and gold have fallen since hitting highs in mid-April on the back of a strong dollar. The world's largest cryptocurrency fell 16% in April, its biggest monthly decline since June 2022.
Analysts David Hung and David Duong said: “This drop gives us optimism because Bitcoin's maximum drawdown from its peak is 23%, below its historical range. That's true.''
“We believe this overall downward drawdown trend will continue, in part due to the legitimacy of BTC as a macro asset,” the authors write. This trend is further reinforced by spot exchange traded funds (ETFs) in the US, Canada and Europe, as well as the recently introduced US ETF. Hong Kong and new applications Australia.
While flows into foreign ETFs may not be as large as in the U.S., “we believe these are an important signal for regulatory engagement with the asset class around the world,” the report said.
BlackRock's largest Bitcoin spot ETF, iShares Bitcoin Trust (IBIT), ended its 70-day inflow streak on Wednesday. First leak in historythe report points out. “While this signals a slowdown in capital inflows into the asset class through ETF products, given the highly liquid markets around the world, ETF flows will only drive some of the BTC price discovery. I think so.” centralized exchange (CEX). ”
“CEX's average weekday spot volume in the first quarter of 2024 was $18.8 billion, more than eight times the $2.3 billion daily volume of U.S. spot ETFs during the same period,” the note said. “This discrepancy in activity suggests that Bitcoin price discovery remains rooted in global demand trends.”
The problem with looking at U.S. ETF inflows as a proxy for global price discovery is most evident in the case of gold, Coinbase said. SPDR Gold Shares, the largest U.S. gold ETF, had net outflows of $3 billion in 2024, even though the precious metal is up 12% since the beginning of the year.
