Key Points from Coinbase Research Report:
- Broad Market Trends: Both equities and gold have experienced declines alongside bitcoin, according to Coinbase’s research report. This trend is occurring against the backdrop of a strengthening dollar.
- Bitcoin’s Pullback: Bitcoin’s recent pullback, which saw a 16% decline in April, is noted to be within its historical range. The maximum drawdown from peak is at 23%, suggesting a trend of overall reduced drawdowns compared to historical levels.
- Legitimization of Bitcoin: The report highlights the legitimization of Bitcoin as a macro asset, supported by the emergence of spot exchange-traded funds (ETFs) in various regions, including the U.S., Canada, Europe, Hong Kong, and Australia.
- ETF Inflows and Price Discovery: While Blackrock’s iShares Bitcoin Trust (IBIT) saw its first-ever outflow after a 70-day inflow streak, the report suggests that ETF flows only drive a portion of Bitcoin’s price discovery. Global demand trends, as evidenced by centralized exchanges (CEXs) with significantly higher trading volumes compared to U.S. spot ETFs, play a significant role in price discovery.
- Global Demand Trends: The report emphasizes that bitcoin’s price discovery remains rooted in global demand trends, with centralized exchanges recording much higher average weekday spot volumes compared to U.S. spot ETFs. This suggests that ETF inflows may not fully capture the dynamics of global demand.
- Comparison with Gold ETFs: The discrepancy between U.S. ETF inflows and global demand is highlighted by comparing bitcoin with gold. Despite a net outflow of $3 billion from the largest gold ETF in the U.S. in 2024, the precious metal has seen a 12% year-to-date increase. This illustrates the limitations of using U.S. ETF inflows as a proxy for global price discovery, particularly evident in the case of gold.
