The research branch of top US-based crypto exchange platform Coinbase says that going forward, investors are likely to aggressively purchase Bitcoin (BTC) when it dips.
In a new blog post, Coinbase Institutional says that gold is a winner this cycle due to rising economic and geopolitical concerns.
According to Coinbase, the success of gold can be attributed to both the threat of inflation and the anticipation that the Federal Reserve will begin its rate-cutting cycle.
“In this environment, gold has been the largest winner, printing new highs amidst increased central bank buying, heightened geopolitical risks, and reflation concerns.
What makes gold’s performance notable is that its appreciation has generally been associated with both Fed rate cuts as well as higher inflation.
Given the market’s recent hawkish views on rate cuts, we think gold’s performance signals an overweighting on inflation relative to Fed rate changes as well as an overall belief that certain inflation bumps could materialize more problematically than anticipated.”
Looking at Bitcoin, Coinbase Institutional says that since the top crypto asset by market cap is generally being accepted as “digital gold,” the market can expect BTC to be more aggressively accumulated during periods of correction.
“In our view, Bitcoin’s increased acceptance as a form of ‘digital gold’ could enable demand from a new subset of investors in this market regime. As a result, we think dips are likely to be more aggressively bought compared to previous cycles, even as volatility persists during price discovery.”
Coinbase also says it continues to be bullish on the crypto king as it benefits from the demand coming from the spot market BTC exchange-traded funds (ETFs) while the network gears up for the reduction of new BTC supply through the halving.
“In our view, the capital unlocked by the ETFs perhaps represents the most fundamental shift in market structure between the previous 2020-21 cycle and today
These capital unlocks, coupled with the upcoming Bitcoin halving (estimated to occur on April 20th-21st subject to variations in network hash rate) and other positive catalysts, make us still largely constructive in our view throughout Q2.”
At time of writing, Bitcoin is trading for $69,283.
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