During the Q4 2023 Earnings Call of Coinbase, CEO Brian Armstrong stated that every institution is starting to own crypto.
The event took place last week, but only today Armstrong’s statements started to circulate.
Summary
The crypto exchange Coinbase and institutions
As revealed by Armstrong himself during the event, Coinbase holds the BTC of 8 of the new Bitcoin spot ETFs that were launched in January, to the point that they custody about 90% of the total $36 billion in assets of these ETFs, including Grayscale’s. He also added that over $4 billion in net inflows have been recorded on Bitcoin spot ETFs.
However, ETFs are just one of the various types of institutional investors existing in the world, but the above data helps to understand the leading role that Coinbase is carving out in this specific sector, particularly thanks to its Coinbase Prime.
Its crypto exchange is not the largest in the world in terms of volumes, nor is it in terms of BTC held on behalf of customers. But it is the only one managed by a publicly traded company in the USA, and it is probably this that makes Coinbase the preferred crypto company for large institutional clients.
When it was born, back in 2012, it was a crypto exchange aimed particularly at retail users, but over time it lost its leadership in this specific sector, to then take the lead in the institutional investor sector.
In addition to being a publicly traded company, another feature that institutional investors really like is its high level of security, even though it may come with slightly higher costs compared to other exchanges.
Armstrong’s statements
However, what matters most is the role that large institutional investors are taking on the market of Bitcoin, and cryptocurrencies in general.
It should not be forgotten that institutional investors are also the biggest whales in the financial markets, so much so that for example BlackRock is the largest asset manager in the world by far.
No retail, not even Satoshi Nakamoto in person, can reach the same levels as the large institutional investors, even if it is the largest existing Bitcoin whale in the world, like Nakamoto himself.
When institutional investors enter a market in large numbers, they end up moving such high volumes of capital that they become the cornerstone of the market itself.
For this reason, the statements of Coinbase’s CEO are important.
Armstrong first said that the new Bitcoin ETFs have been positive for the sector, also because there has been high involvement both from retail investors and institutional investors.
Then he added:
“What is even more important is that every institution is starting to hold cryptocurrencies and this asset class will become a standard part of every diversified portfolio. The financial system is officially adopting cryptocurrencies.”
These words spoken by the CEO of Coinbase carry a truly significant weight, especially in perspective.
Yesterday and today’s drop
Despite these statements starting to circulate only today, they actually date back to last Friday.
On Friday, the price of Bitcoin had remained above $52,000, but since yesterday a correction has been taking place.
For now, the correction has not yet managed to bring the price of BTC back below $50,000, but it is not to be excluded that this will happen, since in recent days the buying pressure was very high while since yesterday it is returning to normal.
So Armstrong’s statements were not able to positively influence the price neither on Friday nor today.
This can be explained either by attributing the cause to the fact that these are statements from the CEO of an exchange, which are rather technical and aimed mainly at professionals, or by blaming the correction that has been ongoing since yesterday and has not yet stopped today.
The buying pressure on Bitcoin has remained very high for a good ten consecutive days, and it was rather difficult for it to continue to stay so high. So Armstrong’s words were not able to stop a phenomenon that was already underway and probably unstoppable.
However, the scenario completely changes in the medium to long term, because the scenario described by the CEO of Coinbase is that of a crypto market that is slowly strengthening, and therefore still has vast untapped potential.
Armstrong also pointed out that now, as far as ETFs in general are concerned, Bitcoin is now the second commodity overall, even ahead of silver, and surpassed only by gold.
