• David Duong, Head of Institutional Research at major crypto exchange Coinbase discussed the current state of cryptocurrency markets.
• He noted that while Bitcoin (BTC) and Ethereum (ETH) remain dominant, altcoins are still attracting significant interest from institutional investors.
• The reason for this is because the market is macro-focused right now as people are investing in their 401(k)s and preparing for tax season.
Crypto Market Performance
David Duong, Head of Institutional Research at major crypto exchange Coinbase recently participated in a discussion with popular crypto analyst Scott Melker on March 2, as part of an interview panel that also featured the Founder of crypto options trading platform Hxro Dan Gunsberg and the Founder of investment adviser Morgan Creek Capital Mark Yusko. They discussed the performance of cryptocurrency markets over the past year.
Institutional Investors Attracted to Altcoins
Duong noted that flows on the exchange from Coinbase’s institutional clients show that 55% is still on Bitcoin and ETH, but there’s still a lot of attention being paid to what’s happening in other parts of the ecosystem outside just Bitcoin and Ethereum. He believes this is because people are macro-focused right now as they are investing in their 401(k)s and preparing for tax season.
Correlation Between Crypto & Risk Assets Decreasing
Duong further argued that what they are currently witnessing in the market is a lot more macro-focused than most people realize – it’s seasonally a weaker period for a lot risk assets as people have their bonus payments putting money into their 401(k). Additionally, he pointed out that correlation between crypto and other risk assets is decreasing.
Expect Weak Economy In Q2
However, he did warn that in the second quarter of this year, “we’re going to hit into real debt ceiling issues” when the economy could potentially become weaker. Melker commented that mini-narratives related to altcoins seem much smaller than those we used to see in past years – suggesting these cycles are driven by existing money rather than new money coming into altcoins.
In summary, although Bitcoin (BTC) and Ethereum (ETH) remain dominant coins in terms of market share, altcoins are still drawing significant interest from institutional investors due to macroeconomic conditions such as bonus payments being put into 401(k)’s and preparations for tax season – however there may be increased economic weakness in Q2 2021 so caution should be taken when considering investments during this period.