Coinbase: Bitcoin is a ‘compelling’ investment in uncertain times

Happy Monday!

Bitcoin continues to trade in a tight range as investors wait on more Bitcoin exchange-traded fund decisions from the Securities and Exchange Commission. In the meantime, Coinbase’s head of institutional research says Bitcoin poses a compelling investment case over the next few months.

Let’s dig in!

Coinbase’s case for Bitcoin investments

Bitcoin poses a useful opportunity for investors in the months ahead, David Duong, head of institutional research at Coinbase, said in a report on Friday.

“As investors seek to navigate the uncertainties in the global macroeconomic landscape in the months ahead, we believe the investment case for Bitcoin could be compelling,” the research report noted.

Duong said the US no longer appears to be “beleaguered by persistent inflation fears,” but instead is enjoying “steady economic growth, courtesy of the government’s expansionary fiscal policy.”

Generative artificial intelligence promises cheaper goods and long-run productivity benefits, Duong said, adding that this could put a cap on inflation in the future, while potentially downsizing workforces.

“We believe that such conditions may warrant the need for loose monetary policies in the long term,” Duong said, alluding to how governments will manage mismatches in supply-demand that contribute to price instability.

Job losses will have to be offset by job creation, further increasing government spending.

The potential combined effect of expansionary fiscal and monetary policy “should support Bitcoin in the long term,” Duong said

Crypto allocations can also diversify a fund manager’s exposure to uncommon sources of risk in traditional equity versus bond portfolios, Duong said.

Bitcoin ETF

The SEC delayed its decision on Ark’s spot Bitcoin ETF on Friday, as was widely expected.

The regulator has more applications to consider — BlackRock, Fidelity and a host of other hopefuls are expected to hear back in early September, 45 days after their initial filing.

Commentators and analysts broadly expect any decision to be delayed to a later date, with the regulator afforded up to 240 days from filing to give a decision. For anyone keeping count, that will put an agency decision at the beginning of 2024.

Crypto market movers

• Bitcoin was flat over the past day, trading around $29,300. The digital asset continues to trade at a steady level, with volatility 30-day volatility of around 0.65%, according to The Bitcoin Volatility Index. Lower volatility results in less price fluctuations, at present Bitcoin’s price action has been “stale,” as noted by K33 Research last week.
• Ethereum was down just 0.1% to about $1,850.
• Dog-themed memecoins were less steady over the past 24 hours. Dogecoin dipped 1.5% and Shiba Inu was down 1.2% – the latter is still up about 14% over the past week though.

What we’re reading

• The CFA now has crypto questions. See if you can get them right – DL News
• The Guidance: PayPal gives stablecoins big boost – DL News