Bitcoin’s price pressures starting to be ‘exhausted,’ Coinbase analysts say

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Many of the technical factors that have been weighing on Bitcoin’s price are beginning to dissipate, potentially setting the stage for a more constructive trading environment ahead, according to a new report from Coinbase.

In its Weekly Market Update published earlier today, Coinbase’s research team pointed to signs that much of the selling pressure specific to Bitcoin and the broader crypto market appears to be exhausted. This can be seen in the liquidations occurring at crypto exchange FTX as well as the re-emergence from bankruptcy of some previously failed crypto firms.

“Many technical factors pressuring Bitcoin specifically (and crypto more broadly) are starting to be exhausted, in our view,” the analysts wrote.

Evidence of this shifting dynamic can be found in net inflows into US spot Bitcoin exchange-traded funds (ETFs). These products have seen average daily inflows exceed $200 million over the past week, bringing total net inflows since January 11 to $1.46 billion alongside healthy daily trading volumes of around $1.35 billion.

This dissipation of factors pressuring crypto coincides with growing evidence that the Fed may be approaching peak hawkishness in its battle against inflation. While the FOMC left rates unchanged this week, Coinbase analysts expect disinflationary trends to continue, allowing the Fed to begin cutting rates by May and end quantitative tightening by June. As the tide turns from tightening to easing, the backdrop for Bitcoin could grow increasingly supportive.

Other potential catalysts cited by Coinbase include Bitcoin’s next “halving” event in late April, which will reduce the supply of newly minted coins, as well as increased institutional adoption of spot Bitcoin ETFs. Analysts expect more financial institutions to add these products to their model portfolios, unlocking greater liquidity.

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