Bitcoin, according to Coinbase, could see fresh demand in the present macroeconomic climate due to investors' view of it as digital gold.
The paper went on to say that the capital unlocked by spot bitcoin ETFs is the most significant change in market structure since the last crypto cycle. Regarding the second quarter's prospects for cryptocurrency markets, Coinbase remains generally optimistic.
Following the Federal Reserve's reiteration of its cautious position regarding the rate of future interest-rate decreases, the cryptocurrency markets and other risk assets experienced a decline. Coinbase (COIN) stated in a research study on Friday that bitcoin (BTC) could profit from gold's outperformance.
"Considering the market's recent pessimistic outlook on interest rate cuts, we interpret gold's performance as a signal that investors are more concerned about inflation than Fed rate changes. We also believe that specific inflationary pressures may manifest more severely than expected," the research stated.
Bitcoin's growing popularity as "digital gold" may attract a different kind of investors under this system, according to expert David Han. "Since volatility remains during price discovery, we anticipate that dips will be purchased with greater vigor than in past cycles."
The U.S. labor market keeps surprising people with positive results, which is one of several macroeconomic indicators that inflation might not be totally contained. Last month, the administration announced that the economy had added 303,000 jobs. That above both the 200,000 expected by economists and the 270,000 added in February, making it the best headline figure since last May.
Less volatility may be on the horizon for the cryptocurrency as a whole if spot bitcoin exchange-traded funds (ETFs) are launched in the United States, the article claims. Funds made available through spot ETFs "may constitute the most fundamental change in market structure between the previous 2020-21 cycle and today," according to Coinbase.
Thanks to this inflow of money, the upcoming bitcoin halving, and other favorable events, Coinbase maintains a generally positive forecast for the cryptocurrency markets for the second quarter. The rate of increase in the bitcoin supply is reduced when miner payouts are cut in half every four years, a process known as the quadrennial halving. It is anticipated that the next halving will take place around April 20.
View for more updates