Bitcoin’s (BTC) recent weakness has not been isolated to crypto markets and therefore is not indicative of sector-specific capitulation, Coinbase (COIN) said in a research report Friday.

Coinbase notes that both equities and gold have been trading lower since reaching highs in mid-April, against the backdrop of a strengthening dollar. The world’s largest cryptocurrency fell 16% in April, in the biggest monthly decline since June 2022.

“What leaves us optimistic in this pullback is that BTC’s maximum drawdown from peak is at 23%, below its historical range,” analysts David Han and David Duong wrote.

“We believe that this trend of overall reduced drawdowns will persist, in part because of the legitimization of BTC as a macro asset,” the authors wrote. This has been reinforced by spot exchange-traded funds (ETFs) in the U.S., Canada and Europe and also by the recently launched ETFs in Hong Kong and new applications in Australia.

While inflows of overseas ETFs may not be as large as those seen in the U.S., “we think they represent an important signal for regulatory engagement with the asset class globally,” the report said.

Blackrock’s iShares Bitcoin Trust (IBIT), the largest spot bitcoin ETF, ended its 70-day inflow streak on Wednesday and saw its first-ever outflow, the report noted. “While this indicates a slowdown of capital inflows to the asset class via the ETF product, we think that ETF flows only drive a portion of BTC price discovery given the global and deeply liquid markets on centralized exchanges (CEXs).”

“The average weekday spot volume on CEXs during 1Q24 was $18.8 billion, more than eight-fold the $2.3 billion daily volume of U.S. spot ETFs over the same period,” the note said. “This discrepancy in activity leads us to believe that bitcoin’s price discovery still remains rooted in global demand trends.”

The problem with looking at U.S. ETF inflows as a proxy for global price discovery is most obvious with gold, Coinbase said. The largest gold ETF in the U.S., SPDR Gold Shares, has had a net outflow of $3 billion in 2024 even as the precious metal has risen 12% year-to-date.

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