As per available data, American crypto trading platform Coinbase Global Inc. has suffered a sharp decline in its Bitcoin reserves. The staggering dip in Coinbase’s Bitcoin reserve is a trend that has been ongoing since February 2024.
A Closer Look at the Bitcoin Data
Some analysts attribute this significant drop to the rising popularity of Spot Bitcoin ETFs. Notably, Burak Kesmeci, a CryptoQuant analyst, highlighted that on February 18, 2024, Coinbase held 1,044,997 BTC. However, this figure has since fallen to 878,000 BTC.
#Bitcoin reserves on Coinbase rapidly declining since Feb 2024
“While there were 1,044,997 $BTC on February 18, 2024, the reserves on the Coinbase exchange dropped to 878K following the increased demand due to Spot ETFs.” – By @burak_kesmeci
Link 👇https://t.co/1aEIW1Q0qJ pic.twitter.com/oiUcq2aghP
— CryptoQuant.com (@cryptoquant_com) June 15, 2024
Despite Coinbase’s declining reserve, other investors are accumulating Bitcoin with massive purchases. MicroStrategy is a notable company that refuses to slow down in Bitcoin acquisition with its holdings over 214,400 BTC. This astonishing accumulation is due to Michael Saylor’s bullish views on Bitcoin.
This depletion of 166,997 BTC on Coinbase reserve has been attributed primarily to increased demand driven by ETF issuers like BlackRock. As per the Crypto-Vanguard report, investors have amassed 857,700 BTC worth a staggering $58.50 billion. This sum was stacked in approximately five months since the approval of US spot Bitcoin ETF products.
Impact of Potential Interest Rate Cuts
With a potential interest rate cut anticipated in September 2024, there is speculation about how this might impact Coinbase’s Bitcoin reserves. Although federal officials in the United States have maintained they are in no hurry to cut the policy rate, the decision will likely depend on changes in inflation and wage growth.
As per Bitcoin, some analysts predict that the lower interest rates could lead to increased investment in the digital asset and other cryptocurrencies. However, Coinbase’s likelihood of growing its reserve to pre-February levels is uncertain.
Principally, if the demand for Spot ETFs continues to impact reserve outflows, market experts suggest that Coinbase might need to adopt new strategies to stem the tide. At the time of writing, BTC is in rebound mode, up 1.18% in 24 hours to $66,163.65.
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