Coinbase: Neutral outlook for the second quarter market; geopolitical issues dominate the overall situation

Source: Coinbase; Translated 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 it difficult to make confident short-term investment decisions. Therefore, the report suggests adopting a risk-reward balanced strategy in the current environment. 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 significant idiosyncratic factors, such as regulatory developments and the rise of AI. However, these factors are far less influential than the broader uncertainties, which make market participants hard to predict. The report cautiously and optimistically believes that the macroeconomic situation has turned positive, which could 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 have generally turned positive, but this still depends on whether Iran can reach an agreement.

Apart from geopolitical issues, the IMF Spring Meetings recently convened a group of finance ministers and central bank governors to discuss the systemic risks that may be posed by the new Mythos AI model launched by 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 advancements 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 strengthen risk assets overall. Positive progress in regulation could also stimulate enthusiasm for cryptocurrencies. Conversely, if the conflict expands and oil prices rise further, investor confidence could be undermined, 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 had shifted noticeably 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 returns’ correlation 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.

The unrealized profit/loss (NUPL) is the difference between relative unrealized profits and relative unrealized losses. These ranges aim to reflect investor sentiment.

According to the NUPL indicator, after the sell-off in February, investor sentiment shifted from anxiety to fear and remained in that state until the end of Q1 2026. This was especially true during the early stages of the Iran conflict. Recently, the indicator seems to have broken into the optimism zone in April, but it remains largely news-driven.

Over the past three months, the supply of Bitcoin traded has decreased by 37% in Q1 2026, while the proportion of untraded supply over a year increased by 1%, indicating 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 ranges set at +1 and -1 standard deviations. These ranges 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 also compares the supply of Bitcoin that has not been traded for at least a year with the supply of recently (within three months) actively traded Bitcoin. In Q1 2026, the supply of recently traded Bitcoin decreased by 37%, while the supply of untraded for over a year increased by 1%, indicating some pure speculators may have been pushed out.

Another chart 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.

The green-highlighted periods indicate times when long-term holders’ holdings increased while exchange holdings decreased, suggesting tokens are leaving exchanges and increasing the likelihood that long-term holders are accumulating rather than dispersing.

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 moved within the past three months decreased by 38%, indicating many pure speculators may have been pushed out of the market.