Coinbase Research Director: The institutional ETF observation period is over, and Q2 expects a large inflow of Bitcoin ETFs

This article is machine translated
Show original

Coinbase Research Director David Duong wrote an article in which he analyzed the reasons for the market's recent hesitation, but he was also more optimistic about the trend of the encryption market after mid-April.

Bitcoin consolidates at US$70,000, why?

Why is Bitcoin fluctuating at the $70,000 level? David Duong believes there are two main reasons.

U.S. tax filing season, corporate quarter-end rebalancing

This year's tax filing season in the United States is from January 23 to April 15, and the deadline to apply for an extension of tax filing is October 16. For the vast majority of taxpayers, the deadline will be April 15.

In addition, David Duong pointed out that the impact of US holidays and corporate quarter-end portfolio adjustments (rebalancing) are potential catalysts for recent market profit-taking.

Micro strategies were shorted

He believes that speculators’short MicroStrategy (MSTR) and long Bitcoin trading strategies are also one of the reasons for recent market fluctuations.

The good news is that these negative factors will gradually fade away.

( The micro strategy was criticized by short seller Kerrisdale Capital, and the stock price fell 11% )

Crypto Markets Are Stronger in Q2

Although he is optimistic about the performance of the crypto market in the second quarter, David Duong believes that these benefits will only start to take effect after the middle of the month due to the following factors.

Bitcoin Halving, End of Review Period for Investment Institutions (ETF)

Bitcoin is about to have its halving in mid-April, which is often the start of a bull market.

He also pointed out that many brokers usually have a 90-day review period for due diligence on new financial products (such as Bitcoin spot ETFs).

Review includes:

  1. Whether such products meet investment minimums and liquidity thresholds.
  2. Whether issues such as daily transactions, custody and supervision pose any challenges to its existing infrastructure.

The review period may end as early as April 10, which may bring a new wave of capital inflows to Bitcoin spot ETFs.

Institutions continue to arbitrage through CME

David Duong finally mentioned that CME’s Bitcoin futures on March 19 reached 19,917 open contracts and hit a record high.

He pointed out that the annualized return rate of the price difference between Bitcoin spot and CME Bitcoin futures in March was about 16%, a slight increase from 14% in February, indicating that many institutions that cannot hold Bitcoin directly still use it to invest indirectly. Bitcoin.

( CME Group’s Bitcoin futures are approaching Binance! What’s the significance of open interest hitting a new all-time high? )

CME BTC contracts surge

Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
Add to Favorites