On the Money: Institutional Bitcoin Boom, Retail Exodus
Institutional Investors Increase Bitcoin Purchases While Retail Market Slows: Report from Coinbase Executive
Here's the scoop on April's revved-up Bitcoin market: Institutions, such as sovereign wealth funds, are pouring in the dough, while retail investors are ditching ETFs. That's according to John D'Agostino, CEO of Coinbase Institutional, who spilled the beans on CNBC's Squawk Box.
During the conversation, D'Agostino revealed that "institutions, long-term, patient pools of capital were piling in" while retail investors exited via ETFs. In fact, Bitcoin ETF flows saw a whopping $470 million in net outflows.
Bitcoin's price hike reached approximately 13% over the month, climbing from $76,500 to nearly $96,000 before settling around $92,800 at press time. The crypto king's surge outstripped gold's 10.5% rise.
So, what's driving this institutional Bitcoin mania? On D'Agostino's radar are three significant elements:
- Macroeconomic shifts: Institutional investors are responding to the April 2 tariff announcements by diversifying away from US dollar-backed assets. Governments are preparing for a weaker dollar, leading them to hold Bitcoin in local currencies rather than converting it to dollars.
- Disconnect from tech stocks: According to D'Agostino, the price action means Bitcoin is not as correlated with high-growth stocks like tech giants NVIDIA. The post-COVID tech trade narrative is unraveling, as Bitcoin is seen as a distinct asset class.
- Inflation hedge: Institutions that missed the gold rally view Bitcoin as a potent long-term hedge against inflation. Top commodity traders even include Bitcoin in their inflation-hedge models, placing it high on their lists.
Is Bitcoin the new gold? The crypto's recent divergence from equities (rising while the S&P 500 and Nasdaq fell 3% on Monday) has reignited the safe-haven discussion. While D'Agostino advises caution, he acknowledges the growing role Bitcoin is playing in institutional strategy.
But is Bitcoin's strength a result of shifting sentiment or structural change? According to Nansen CEO and co-founder Alex Svanevik, Bitcoin has displayed remarkable resilience during the trade war. One factor might be reports that the U.S. Treasury is exploring methods to move reserves into Bitcoin.
However, it's essential to remember that Bitcoin remains a risky asset that could be a casualty in the event of escalating recession odds. Svanevik notes that gold could face "net selling if investors panic to cover margin calls," as seen during the worst days of the trade war earlier this month.
Thinking about diving into Bitcoin or wondering if it's the next big thing? Keep these trends in mind and remember, as with any investment, it's all about taking calculated risks and doing your homework.
Sources:
- CNBC Squawk Box
- CoinGecko
- Bitcoin Magazine
- The Block Crypto
- Decrypt
- Institutions, including sovereign wealth funds, are floodingly investing in bitcoin, as revealed by John D'Agostino, CEO of Coinbase Institutional, on CNBC's Squawk Box.
- In contrast, retail investors have been selling Bitcoin Exchange-Traded Funds (ETFs), contributing to a $470 million net outflow.
- The price of bitcoin surged by approximately 13% in April, reaching nearly $96,000, exceeding gold's 10.5% rise.
- According to D'Agostino, institutions are investing in bitcoin due to macroeconomic shifts, disconnect from tech stocks, and perceived inflation hedge.
- Bitcoin is being viewed as a distinct asset class, separate from high-growth stocks, as the post-COVID tech trade narrative weakens.
- Nansen CEO Alex Svanevik highlights Bitcoin's resilience during the trade war, suggesting potential U.S. Treasury involvement in holding Bitcoin reserves.
- Bitcoin's strength should be approached with caution, as it remains a risky asset, and could be adversely affected by escalating recession odds, similar to gold.
