At the start of 2026, Bitcoin and the overall crypto market saw a significant rebound, coinciding with major political changes in Venezuela. Discussions began about whether this rally was related to the country's long-standing monetary disorder and the experience of using Bitcoin. In a recent interview, John D'Agostino, Head of Institutional Business Strategy at Coinbase , pointed out that while Bitcoin's role in a dysfunctional monetary system has long been part of the market narrative, current fund flows and market structure suggest that the recent price recovery primarily reflects improved liquidity, continued institutional momentum, and a return to retail investor sentiment, rather than being directly driven by a single political event.
The market rebounded at the beginning of the year, attempting to link the rally to the turmoil in Venezuela.
The host began by mentioning that Bitcoin has become a part of daily life for many people in Venezuela, so the market naturally asks whether this political upheaval will once again validate Bitcoin's utility when a country's system fails, or even become a catalyst for price increases.
In response, D'Agostino stated that he understands the market's desire to link the recent bullish trend to the Venezuelan situation and agrees that such cases do indeed support the narrative of Bitcoin as an "alternative currency" in the long run. However, based on the current market structure and fund flows, he does not believe that this political event is the primary reason directly driving Bitcoin's short-term rise.
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Following the liquidity shock event on October 11th, the market gradually entered a recovery phase.
D'Agostino further reviewed recent market developments, pointing out that the current price rebound is more like a result of the market's gradual recovery following the liquidity crisis of October 11th last year. He stated that at that time, the market experienced significant deleveraging and liquidity tightening, but as time went on, market makers' risk tolerance gradually increased, and they began to add riskier positions back into the market.
Meanwhile, retail investor sentiment, which had been significantly lagging, has begun to catch up with the positive momentum already present in institutional investors. Overall, this market rally is more akin to a mean-reversion correction than a sentiment-driven rebound driven by a single event.
Institutional investors continued their strategic deployments, while retail investors' pessimistic sentiment created a significant gap.
Speaking about last year's market conditions, D'Agostino pointed out that one of the most obvious phenomena in the market over the past six to seven months was the significant gap between retail investor sentiment and institutional behavior. At the time, much market discussion focused on Bitcoin's roughly 6% drop throughout the year, but in the eyes of institutions, such volatility was a fairly typical part of Bitcoin's long-term trend.
He stated that, in reality, no institution with comprehensive research and long-term strategies has halted its investment due to such price volatility. On the contrary, institutional investment in Bitcoin and crypto assets has not slowed down; in fact, some have even accelerated.
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ETF fund flows have turned positive, and prices are reacting to market restructuring.
In response to questions about why prices weakened despite continued institutional buying, D'Agostino believes the key lies in the structural differences in ETF fund flows. He points out that the large net outflows from ETFs at the time were mainly due to panic selling by retail investors, while institutional funds played a role in absorbing and stabilizing the market during that period, providing support for prices and preventing them from falling further.
With the recent recovery in retail investor sentiment, ETF fund flows have also shown a significant change. According to D'Agostino, in the past seven days, Bitcoin ETFs have seen net inflows of approximately $520 million (actually $454 million), turning the market's funding structure positive, and prices have responded accordingly.
Gold and Bitcoin are seen as part of the same anti-inflation narrative.
When discussing long-term asset allocation, D'Agostino reiterated his consistent point that although gold and Bitcoin are different types of assets, they are both considered tools for preserving value and hedging against inflation risk in terms of investment function, and therefore are often compared in the same context.
He pointed out that looking back over the past decade, gold has seen a cumulative increase of approximately 260%, and the S&P 500 index has risen by about 300%, but the purchasing power of the US dollar has declined by more than one-third during the same period. In contrast, Bitcoin has seen a cumulative increase of over 11,000% during the same period. In his view, this is precisely why Bitcoin is still considered an important asset allocation option by some investors in the long term.
Venezuela's current situation remains relatively unfamiliar to American investors.
Returning to the case of Venezuela, D'Agostino pointed out that the United States and most developed countries have never truly experienced a situation where a currency rapidly loses its function in a short period of time. He relayed the observations of other guests, noting that in Venezuela, even the US dollar itself is difficult to obtain, and the public's use of Bitcoin is not an ideological choice, but a result of having no other choice under the current circumstances.
He also mentioned that such scenarios are not limited to a single country and, in the long run, remain one of the frequently mentioned backgrounds in the Bitcoin narrative.
Bitcoin remains highly volatile, but this does not affect discussions about its asset attributes.
D'Agostino did not deny the criticism that Bitcoin's high volatility makes it unsuitable as an everyday payment tool. He stated frankly that Bitcoin is indeed highly volatile and unsuitable for purchasing everyday goods, and even when used as collateral, an extremely conservative approach must be taken.
However, he also emphasized that the importance of an asset is not necessarily equated with its volatility. He cited crude oil as an example, another key global asset, which has historically experienced extreme price drops to negative values.
Institutions have shifted to a more pragmatic approach, and "whether it is true or not" is no longer the core issue.
Later in the program, when discussing the changing attitudes of large financial institutions, D'Agostino stated that almost all large financial institutions are now developing blockchain-related strategies at different levels, and major banks, including JPMorgan Chase, have invested in related technology research and applications.
He also mentioned JPMorgan Chase CEO Jamie Dimon 's recent public remarks, which pointed out that the focus of market discussion has long since shifted from "whether this really exists" to "how to use it, to what extent it is used, and whether it is suitable for one's own system".
In his view, past skepticism about cryptocurrencies is gradually fading from mainstream view, and the market has entered a new stage centered on strategy selection and risk management.
This article, titled "Coinbase's Head of Strategy: BTC's Early-Year Rebound Was Driven by Liquidity Recovery, Not by the Venezuelan Turmoil," first appeared on ABMedia, a ABMedia .
