Coinbase predicts a slowdown in Bitcoin price growth

Experts at Coinbase point out factors that could limit Bitcoin price growth

Coinbase stated that the growth of the cryptocurrency market is constrained by macroeconomic and technical factors

Despite Bitcoin reaching a new all-time high of $71,000, the cryptocurrency market has encountered obstacles that could hinder its further growth in the short term, reports CoinDesk, citing a Coinbase report.

Forced closures of short positions, which were previously a primary driver of Bitcoin (BTC) price growth, have exhausted themselves, analysts at the cryptocurrency exchange Coinbase wrote. However, according to them, spot Bitcoin ETFs in the US continue to create significant demand for Bitcoin.

In its report, Coinbase notes that a decrease in cash reserves among fund managers, as well as portfolio rebalancing at the end of the quarter, could limit liquidity in the market. Another factor that could restrict further growth is the winding down of the Federal Reserve's (FRS) support program for banks.

It is expected that on March 11, the FRS will end the operation of the Bank Term Funding Facility (BTFP) program, which was used to support the country's regional banks. This may lead to the closure of arbitrage opportunities for banks but could also increase the vulnerability of the financial system.

In light of these factors, Coinbase considers trading Bitcoin in a narrow range until the halving, which is expected to occur in April, to be the most likely scenario.

• Impact of Bitcoin ETFs

"The amount of Bitcoin held by ETFs has almost tripled the amount mined by miners," the Coinbase report says.

The total assets under management of all Bitcoin-oriented investment funds, including ETFs, have exceeded $67 billion, which represents more than 1 million Bitcoins or over 5% of the total circulating supply.

BlackRock's Bitcoin ETF remains the leader in attracting funds into exchange-traded funds for the leading cryptocurrency. Since its launch in early January 2024, the spot exchange-traded fund for Bitcoin from IBIT under BlackRock's management has reached $13.5 billion in assets under management.