Coinbase: Neutral Market Outlook for Q2, Geopolitics Dominates the Overall Situation

Source: Coinbase; Edited by Felix, PANews

Coinbase Institutional and Glassnode jointly released the “Charting Crypto” report for Q2 2026, stating that due to the ongoing and highly uncertain geopolitical landscape, the outlook for the cryptocurrency market in Q2 2026 is neutral.

PANews has summarized the key points of the report; below are the details.

The current geopolitical landscape remains ongoing and highly uncertain, making short-term investment decisions difficult to make with confidence. Therefore, the report suggests that in the current environment, a risk-reward balanced strategy should be adopted. Financial markets are mainly driven by macroeconomic events and the latest developments in the Middle East conflict, which is highly volatile. Although the ultimate impact of the conflict on the global economy remains unclear, the International Monetary Fund (IMF) issued a statement lowering this year’s global GDP growth forecast from 3.4% to 3.1%, on the condition that “the duration and scope of the conflict remain limited.” However, the Oxford Economics estimates that the severity of oil supply disruptions could slow global GDP growth to 1.4% in 2026, as “the US and most major developed economies will fall into recession.”

The crypto market still faces some important idiosyncratic factors, such as regulatory developments and the rise of AI. But these factors are far less significant than the broader uncertainties, which make market participants hard to predict. The report cautiously and optimistically believes that the macro situation has turned positive, which may help many crypto assets bottom out in the short term and recover later in the quarter. In fact, technical indicators for cryptocurrencies and stock markets generally turned positive, but this still depends on whether Iran can reach an agreement.

Apart from geopolitical issues, the IMF Spring Meeting recently convened a group of finance ministers and central bank governors to discuss the systemic risks that may be brought by the newly launched Mythos AI model from Anthropic. The report suggests that the model’s ability to exploit security vulnerabilities could impact future markets.

Meanwhile, the report highlights two endogenous factors in the crypto space worth monitoring in the medium to short term. The first is the progress of the CLARITY Act, and the second is advances in post-quantum cryptography.

It is worth noting that the report points out that if the Middle East conflict is thoroughly resolved, accompanied by falling oil prices and easing inflation, it could help risk assets overall strengthen. Positive progress in regulation could also stimulate enthusiasm for cryptocurrencies. Conversely, if the conflict expands and oil prices rise further, investor confidence could be shaken, and global economic growth could be hindered, as the risk of a global recession increases.

Global Investor Survey

From March 16 to April 7, 2026, a survey was conducted among 91 global investors (29 institutional investors and 62 non-institutional investors) to understand their views on crypto market trends, industry positioning, risk management, and other aspects.

The survey shows that by the end of the first quarter, investors’ outlook has shifted significantly toward a bearish view at the cycle’s end. Currently, about 82% of institutional investors and 70% of non-institutional investors believe the market is in a bear market (declining) or at the end of a bear market, up from 31% and 36% in December 2025.

However, investors still believe Bitcoin is severely undervalued. Three-quarters of institutional investors (75%) and about three-fifths of non-institutional investors (61%) think Bitcoin is undervalued, with little change compared to December last year; only 7% of institutional investors and 11% of non-institutional investors believe Bitcoin is overvalued.

Additionally, expectations for Bitcoin dominance have shifted toward a “steady state.” The proportion of institutional investors expecting Bitcoin dominance to rise has decreased from 40% to 25%, while most institutional investors (54%) now expect dominance to remain near current levels (up from 44%), with another 21% expecting it to decline.

Market Overview

Affected by broad sell-offs, the total cryptocurrency market capitalization (excluding stablecoins) declined by about 18% in Q1 2026. Notably, during the same period, the total supply of stablecoins increased from $308 billion to $318 billion, indicating some sellers may have chosen to stay within the crypto ecosystem, waiting for market volatility to subside.

In terms of correlation with macro assets, in Q4 2025, Bitcoin’s daily average returns correlated with US stock returns (represented by the S&P 500) rose to 0.58, meaning that although there are some differences in absolute performance metrics, this correlation remains statistically significant.

Meanwhile, what disappointed most crypto market participants is that Bitcoin’s correlation with gold remains minimal, as gold has been one of the best-performing assets in 2025.

Cryptocurrency and macro asset correlation matrix

Bitcoin

In Q1 2026, Bitcoin options open interest increased slightly by 2.4% (compared to the end of Q4 2025), while perpetual contract open interest saw a larger recovery, rising about 8.6%. The latter suggests that after the deleveraging event on October 10, 2025, the Bitcoin market structure may be returning to normal.

Unrealized Profit/Loss (NUPL) is the difference between relative unrealized profit and relative unrealized loss. These ranges aim to reflect the sentiment of different investors.

According to the NUPL indicator, after the sell-off in February, investor sentiment shifted from anxiety to fear and persisted until the end of Q1 2026. Especially during the early stages of the Iran conflict, this sentiment remained. Recently, the indicator seems to have broken into the optimism zone in April, but it is still largely driven by news events.

The amount of Bitcoin traded over the past three months decreased by 37% in Q1 2026, while the proportion of supply that has not been traded for over a year increased by 1%, indicating that some pure speculators may have been pushed out of the market.

The chart below shows the percentage of Bitcoin supply in profit, along with two statistical bands set at +1 and -1 standard deviations. These bands represent important warning and accumulation zones. The current indicator suggests Bitcoin is in an accumulation zone, confirming a positive technical pattern entering Q2 2026.

The chart below compares the supply of Bitcoin that has not been traded for at least a year with the supply of Bitcoin that has been actively traded within the past three months. In Q1 2026, the supply traded in the past three months decreased by 37%, while the supply that has not been traded for over a year increased by 1%, indicating some pure speculators may have been pushed out.

The chart below shows the net change in long-term holders’ holdings (based on a threshold of 155 days or more) versus the net change in exchange holdings. The report suggests that the convergence of these two data points (i.e., increasing long-term holdings and decreasing exchange holdings) can reveal the actual timing of profit-taking.

Periods highlighted in green indicate times when long-term holdings increased while exchange holdings decreased, suggesting tokens are leaving exchanges and that long-term holders are more likely to be accumulating rather than distributing during these times.

Ethereum

During the sell-off in early February 2026, the NUPL fell below the “capitulation” phase and remained in that phase for most of Q1 2026, but since early April, market sentiment has begun shifting toward the “hope” phase.

In Q1 2026, the share of ETH that has not moved for over a year increased by 1%, while the share that has moved in the past three months decreased by 38%, indicating that many pure speculators may have been pushed out of the market.