While gold soars amid inflationary fears and central banks step up their purchases, cryptocurrencies are suffering a decline after the Federal Reserve's cautious approach to rate cuts. In this context, David Han, analyst at Coinbase, believes that Bitcoin could represent an opportunity as “digital gold” acceptable to a new segment of investors.
Bitcoin, a credible competitor to gold
According to Han's Friday report, Bitcoin dips are likely to be “bought more aggressively” than in previous cycles, despite continued volatility during price discovery. The analyst points out that easier access to Bitcoin through the recently approved spot ETFs in the United States could attract more institutional capital, potentially reducing volatility.
Han identifies two positive signals for Bitcoin: the increased involvement of institutional investors and the imminence of the next Bitcoin halving scheduled for around April 20-21. Open interest in CME Bitcoin futures, now at $9.9 billion, exceeds that of any centralized exchange and represents a significant share of the total Bitcoin futures market. This change, combined with the upcoming halving, is viewed favorably for the second quarter.
Favorable dynamics supported by ETFs and halving
In a recent report co-authored with David Duong, Head of Research at Coinbase, Han believes that the crypto market could benefit from a boost in the second quarter, driven by spot Bitcoin ETFs and the halving event.
If Han considers that the next halving could catalyze a rise in prices, he qualifies it by suggesting that a seasonal slowdown typical of crypto markets and other risky assets could temper this possible surge.
With the gradual adoption of Bitcoin by key financial players such as Goldman Sachs, UBS, Citi and Citadel, recently added as authorized participants for BlackRock's iShares Bitcoin ETF, digital gold appears to be finding its way to increased legitimacy . If Han's predictions come true, BTC could well conquer a new segment of investors looking for an alternative digital store of value, competing with physical gold.
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