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Cryptocurrency exchange Coinbase says bitcoin dips are likely to be “more aggressively bought compared to previous cycles, even as volatility persists during price discovery.” The crypto firm noted that the impact of U.S. spot bitcoin exchange-traded funds (ETFs) and the larger inflow of institutional demand can be seen in the open interest of bitcoin futures.
Coinbase Institutional’s research team discussed various topics, including bitcoin and the impact of spot bitcoin exchange-traded funds (ETFs), in their latest Weekly Market Commentary, published Friday.
“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,” the crypto firm stated, elaborating:
As a result, we think dips are likely to be more aggressively bought compared to previous cycles, even as volatility persists during price discovery.
Moreover, Coinbase noted that bitcoin’s broader access to capital as a result of the launch of U.S. spot bitcoin ETFs “could also contribute to dampened volatility (relative to previous cycles) in our view.”
The crypto exchange continued:
The impact of these ETFs and the larger inflow of institutional demand can be seen in the open interest of bitcoin futures, which can be used as hedging instruments.
Coinbase highlighted that the CME bitcoin futures open interest at $9.9 billion has surpassed that of any single centralized exchange (CEX) and accounts for more than one third of the entire bitcoin futures market (including both perpetual and fixed futures).
“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 20-21 subject to variations in network hash rate) and other positive catalysts, make us still largely constructive in our view throughout Q2,” the crypto exchange detailed.
