Coinbase stays ‘neutral’ as Q2 starts with fresh institutional momentum

Coinbase Institutional, the integrated solutions platform for investors and institutions that’s operated by the largest crypto firm in the US, Coinbase has made it known to investors hoping for clarity in the market that there is none to give after giving a neutral outlook for the market.

Coinbase Institutional pointed to the changing macro conditions as being responsible for what is making forecasting highly unreliable.

According to Coinbase, the conflict in Iran has disrupted expectations for fiscal and monetary stimulus and pushed investors toward cash at a pace not seen since 2020.

Coinbase cited Bank of America’s Fund Manager Survey, which found out that cash holdings rose almost one percentage point to 4.3% within a single month, the fastest accumulation of dry powder in five years.

The research arm also pointed out that regulatory development, including progress on a US crypto market structure bill and quantum computing advances, has been subordinated entirely to the geopolitical noise.

Is Bitcoin holding up better?

Bitcoin has recently shown some degree of composure that has caught some analysts’ attention, managing a run-up to as high as $72,000 within the day. Coinbase notes that the cryptocurrency has experienced a one-standard-deviation decline, a modest retreat compared with the S&P 500’s three-to-four sigma drop over the same period.

US spot Bitcoin ETFs closed the first quarter with around $500 million in net outflows, Bitcoin’s worst first-quarter performance since 2018, ending the period down nearly 24% from January highs. However, March delivered a $1.32 billion inflow rebound, offering some form of signal that institutional buyers have not abandoned it.

Coinbase avoids bullish predictions

US spot Bitcoin ETFs recorded approximately $471 million in net inflows on April 6, their strongest single-day intake in more than six weeks, according to data published by Farside Investors.

BlackRock’s IBIT led with $181.9 million, followed by Fidelity’s FBTC at $147.3 million and ARK Invest’s ARKB at $118.8 million. It was the sixth-largest daily inflow total of the year.

Institutional ownership of spot Bitcoin ETFs now accounts for an estimated 38% of total assets, up from 24% a year earlier, with hedge funds, pension funds, and registered investment advisers collectively holding more than $40 billion in shares.

Coinbase serves as prime broker and custodian for many of the ETFs that are pulling in that institutional capital, and this places it at the center of the very flows it is declining to predict.

Another institutional momentum piece arrives when Morgan Stanley’s Bitcoin ETF becomes live as from Wednesday, April 8 via an NYSE listing notice.

This makes it the first major US bank to issue a spot Bitcoin ETF directly rather than distributing products from external asset managers.