Coinbase (COIN) says the recent weakness of Bitcoin (BTC) has not been isolated to cryptocurrency markets

Bitcoin (btc) Coinbase (COIN) said in a research report on Friday that the recent weakness was not isolated to cryptocurrency markets and therefore does not indicate sector-specific capitulation.

Coinbase notes that both stocks and gold have traded lower since hitting their highs in mid-April, on the back of a rising dollar. The world's largest cryptocurrency fell by 16% in April, the largest monthly decline since June 2022.

“What makes us optimistic about this pullback is that Bitcoin’s maximum drawdown from the peak is 23%, below its historical range,” analysts David Hahn and David Dong wrote.

“We believe that this trend of generally declining withdrawals will continue, in part due to the legitimization of Bitcoin as a macro asset,” the authors wrote. This has been reinforced by spot exchange-traded funds (ETFs) in the US, Canada and Europe, as well as by the recently launched ETFs in the US. Hong Kong And new applications in Australia.

While offshore ETF flows may not be as large as those seen in the US, we believe they represent an important signal of regulatory engagement with the asset class globally, the report said.

Blackrock's iShares Bitcoin Trust (IBIT), the largest bitcoin spot fund, ended its 70-day inflow streak on Wednesday and was seen rising. First outflowThe report noted. “Although this indicates a slowdown in capital inflows into the asset class via the ETF product, we believe ETF inflows are only driving part of Bitcoin price discovery given the world's highly liquid global markets. Central exchanges (CEXs).”

“Average weekday spot volume on the stock exchange during the first quarter of 2024 was $18.8 billion, more than eight times the $2.3 billion daily volume of U.S. ETFs during the same period,” the note said. “This discrepancy in activity leads us to believe that Bitcoin price discovery remains rooted in global demand trends.”

The problem of looking at US ETF flows as a proxy for global price discovery is most pronounced with gold, Coinbase said. The largest U.S. gold ETF, SPDR Gold Shares, posted a net outflow of $3 billion in 2024 even as the precious metal is up 12% year-to-date.