According to a recent research report from Coinbase, the crypto market is gearing up for a positive second quarter, leaving behind many challenges encountered previously. The company emphasized that the upcoming months hold promise, particularly after mid-April.
One significant event expected during this period is the bitcoin reward halving, slated for April 16-20. This event, occurring every four years, involves halving miner rewards, effectively slowing down the rate of bitcoin supply growth.
On the demand side, Coinbase highlighted the impending conclusion of the 90-day review period, often conducted by wirehouses like Morgan Stanley, Bank of America, UBS, and Goldman Sachs, regarding new financial products such as spot bitcoin exchange-traded funds (ETFs). This review period could end as early as April 10, potentially opening doors for significant capital inflows into U.S.-based spot bitcoin ETFs, especially from major money managers like LPL Financial.
The report also underscored sustained institutional interest in the crypto sector, exemplified by the increasing level of leveraged short positions in Chicago Mercantile Exchange (CME) bitcoin futures, which reached a record high on March 19. Additionally, the total value locked (TVL) in on-chain derivatives has surged to an all-time high of $3.4 billion, indicating growing interest despite decentralized finance (DeFi) TVL remaining below its previous cycle highs by about 50%.
Coinbase also pointed out a potential factor contributing to recent market volatility: investors shorting shares of MicroStrategy, a software developer that has been strategically accumulating BTC. This contrast between shorting MicroStrategy shares and going long on bitcoin could be influencing market dynamics.
Overall, Coinbase remains optimistic about the crypto market’s prospects for the second quarter, with various indicators suggesting favorable conditions ahead.