Following the Federal Reserve’s reaffirmation of caution on the rate of future interest rate decreases, cryptocurrency markets fell along with other risky assets. In a research report published on Friday, Coinbase (COIN) stated that gold has outperformed and that this might help bitcoin (BTC).
The research stated, “We think gold’s performance signals an overweighting on inflation relative to Fed rate changes as well as an overall belief that certain inflation bumps could materialise more problematically than anticipated, given the market’s recent hawkish views on rate cuts.”
Analyst David Han stated, “Bitcoin’s growing acceptance as a type of ‘digital gold’ could enable demand from a new subset of investors in this regime.” As a result, even though volatility continues during price discovery, we believe dips are likely to be bought more aggressively than in prior cycles.
The U.S. labour market is still surprising people to the upside, in addition to other macroeconomic indicators that suggest inflation may not be fully contained. The government announced on Friday that the economy added 303,000 jobs in the previous month. That’s the highest headline number since May of last year, and it above the 270,000 additions in February and the 200,000 economist expectations.
The paper suggests that reduced volatility may arise from the cryptocurrency’s increased accessibility to capital subsequent to the introduction of spot bitcoin exchange-traded funds (ETFs) in the United States. According to Coinbase, the capital made available by spot ETFs “may represent the most fundamental shift in market structure between the previous 2020–21 cycle and today.”
With this cash infusion, the halving of the bitcoin price that will occur later this month, and other encouraging factors, Coinbase’s view for the cryptocurrency markets for the second quarter remains mostly optimistic.
The 50% reduction in miner incentives known as the quadrennial halving slows down the rate of increase in the bitcoin supply. It is anticipated that the subsequent halving will take place approximately on April 20.