Coinbase (COIN) expressed optimism for the crypto market’s outlook in the second quarter, suggesting that many previously identified challenges are now behind.
In a research report released on Friday, the company highlighted several positive factors poised to shape the market in the coming months.
According to Coinbase, the effects of these positive factors are anticipated to become more evident, particularly starting in the latter half of April.
This quadrennial event involves a 50% reduction in miner rewards, consequently slowing down the growth rate of bitcoin supply.
On the demand side, Coinbase pointed out the 90-day review period commonly adopted by wirehouses, such as Morgan Stanley, Bank of America, UBS, and Goldman Sachs, when evaluating new financial products like spot bitcoin exchange-traded funds (ETFs).
The report noted that this evaluation period could conclude as early as April 10, potentially paving the way for increased adoption of such offerings.
While wirehouses play a significant role in wealth management, Coinbase highlighted that major U.S. wealth-management platforms operating outside these institutions could also influence market dynamics.
Notably, the normal observation period for some large money managers, like LPL Financial, spans three months, which could unlock significant capital for U.S.-based spot bitcoin ETFs over the medium term.
Institutional interest in the crypto space remains strong, as indicated by the level of leveraged short positions in Chicago Mercantile Exchange (CME) bitcoin futures, reaching a record high on March 19.
Additionally, the total value locked (TVL) in on-chain derivatives has reached an all-time high of $3.4 billion, underscoring ongoing interest despite decentralized finance (DeFi) TVL remaining below previous cycle highs by about 50%.
Coinbase also addressed recent market volatility, attributing it in part to investors shorting shares of MicroStrategy (MSTR), a software developer that has strategically invested in BTC, compared to long positions in bitcoin.
