Coinbase Optimistic of Crypto Market Setup for 2024’s Second Quarter
The US largest crypto exchange by trading volume is optimistic of standout performance in 2024’s second quarter. The report acknowledges that Bitcoin halving is the primary supply-side event expected to occur mid-April.
The report by Brian Armstrong-led Coinbase projects that the supply crunch in Bitcoin halving will occur in mid-April. Additionally, the report is optimistic that wirehouses are edging closer to approving the spot Bitcoin exchange-traded funds (ETFs).
Bitcoin Halving and Elevated Institutional Interest Critical to Second-Quarter Performance
The Coinbase report considers the approval of spot Bitcoin ETFs as a critical milestone for the wirehouses, given the elevated interest in crypto space harbored by the institutions.
Coinbase emphasized in its Friday, March 29 report that the crypto ecosystem is set for positive second-quarter performance. The report considers that most previous headwinds are now in the rear-view of the industry’s mirror.
The Nasdaq-listed Coinbase Global Inc, under the ticker symbol COIN, considers the above-mentioned positive factors will manifest themselves after mid-April. The prediction aligns with the anticipation of Bitcoin reward halving occurring on April 16-20. The quadrennial halving will slash the miner rewards per every block completed by 50%. Doing so will lower the Bitcoin supply, thus averting inflation that would otherwise superimpose on the price.
Wirehouses Edging Closer to Conclude 90-Day Observation
The Coinbase report identifies the expiry of the 90-day review period that most wirehouses deploy as part of exercising due diligence before approving new financial offerings is edging closer. Coinbase analysts David Han and David Duong illustrated that the review period is set to conclude on April 10, with approval for the spot Bitcoin ETFs likely.
The report acknowledges that the list of wirehouses influencing the demand side is lengthy. The report notes multiple wirehouses besides Goldman Sachs, Bank of America, and Morgan Stanley. Additional wealth gatekeepers feature wealth-management entities operating outside the large financial institutions.
Coinbase report considers the three-month review period as the normal observation window that large money managers adopt. The report is optimistic that the expiry of the 90-day period would help unlock significant capital in the medium term for the recently approved spot Bitcoin ETFs.
Short Positions for MicroStrategy Fueling Volatility
The Coinbase report refers to the institutional interest in the digital assets space. The elevated experiences are inevitable. The report considers that the interest remains elevated, citing the short leverage positions for bitcoin futures witnessed on March 19 in the Chicago Mercantile Exchange (CME).
The report pointed to on-chain derivatives where the total value locked (TVL) hit a historic milestone at $3.4 billion. Such occurs when the TVL within the broader decentralized finance (DeFi) is 50% off the levels witnessed in the previous cycle.
Coinbase attributes the recent market volatility witnessed by investors tapping short positions for MicroStrategy (MSTR) shares. The investors are considering the software developer and business intelligence behind the largest Bitcoin treasuries by a public-listed company as priced at a premium.
