A recent report by Coinbase reveals that a significant majority of institutional investors believe Bitcoin is currently undervalued, even as the cryptocurrency market grapples with suppressed sentiment and geopolitical uncertainties. This perspective emerges despite Bitcoin's recent underperformance compared to traditional assets like gold and silver, signaling a deeper conviction in its long-term potential.
Institutional Outlook on Bitcoin's Valuation
According to a Coinbase survey conducted between December and January, approximately 71% of institutional investors and 60% of independent investors consider Bitcoin to be undervalued, particularly when its price hovers around the $85,000 to $95,000 range. This sentiment persists even though Bitcoin, currently trading around $87,600, remains 30% below its October all-time high of $126,080. The cryptocurrency market has largely trended sideways or downwards since a major crash in October, further exacerbated by escalating geopolitical tensions and new tariff threats, which have negatively impacted investor confidence. In stark contrast, gold has surged to record highs, and silver has doubled in value, while the S&P 500 has seen modest gains.
Deep-Seated Conviction Amidst Volatility
Despite the challenging market conditions, institutional investors demonstrate strong long-term conviction in Bitcoin. A striking 80% of institutional respondents indicated they would either maintain their current cryptocurrency positions or increase their holdings in response to another 10% market downturn. This underscores a belief that the current market phase represents an accumulation opportunity or a bear market, rather than a fundamental flaw in the asset. Over 60% of these investors have either held or increased their crypto exposure since Bitcoin's peak in October, highlighting a strategic view beyond short-term fluctuations. Looking ahead, Coinbase anticipates potential economic tailwinds that could favor cryptocurrencies. The report suggests that the Federal Reserve might implement two rate cuts in 2026, which historically tends to boost risk assets. Furthermore, a stable broader economy, characterized by consistent consumer inflation at 2.7% and robust GDP growth exceeding 5% in the fourth quarter, provides a solid foundation that could eventually translate into renewed positive momentum for the crypto market.
