Institutional Demand and Sovereign Funds, Not Retail, Behind Bitcoin's April Rally, Coinbase Institutional's John D'Agostino Reveals

John D'Agostino, Head of Strategy at Coinbase Institutional, revealed that sovereign wealth funds and institutional investors have become key drivers of bitcoin accumulation in April

John D’Agostino, Head of Strategy at Coinbase Institutional, highlighted the crucial role of sovereign wealth funds and institutional investors in bitcoin accumulation in April, juxtaposed with retail investors’ slight withdrawal from bitcoin exchange-traded funds (ETFs), in a recent interview with CNBC.

Highlighting the stifling de-dollarization fears following U.S. tariff announcements in early April, funds are diversifying away from the dollar, stated D’Agostino.

“If you believe that’s going to have a spillover effect on global trade—if you believe there’s going to be less global trade, much of which is denominated in U.S. dollars—then you’d expect lower demand for U.S. dollars. That’s what we refer to as de-dollarization. Well, one of the ways bitcoin is used by these large pools of capital is they buy it with their local fiat currency, hold it, and sell it into dollars when needed.”

Additionally, he pointed out bitcoin’s decoupling from tech stocks after being bundled into the levered tech trade post-Covid-19, and institutions' interest in bitcoin as a gold-like hedge amid inflationary pressures, with its scarcity and non-sovereign status offering unique appeal.

BTC price action vs. major market trends (Coinbase charts, author's analysis).

Notably, D’Agostino remarked that bitcoin ETFs saw $470 million in net outflows in April, even as direct purchases by institutions pushed bitcoin’s price up 13% — outperforming gold’s 10.5% gain.

“Institutions, sovereigns, and patient pools of capital were piling in during April. It’s a phenomenal statistic. But if you look at bitcoin ETFs, they had $470 million in outflows in April. So there’s a divergence there. Because if you look at the numbers, those ETFs would have to be funded by another asset class, which signals that institutions are pivoting out of other asset classes into bitcoin.”

While the sovereigns’ exact ETF participation remains opaque due to their limited reporting, their significant presence in the spot market is undisputable, and their preference for direct purchases is well-known.

D’Agostino further noted bitcoin’s fundamental alignment with gold as a hedge, considering its fixed supply and mining difficulty adjustments, which traders are exploiting to seek alternatives from crowded gold positions.

“There’s a very short list of assets that mirror the characteristics of gold. And in terms of macroeconomic trends, there’s a narrative that’s building around bitcoin. People are thinking about how to diversify out of dollar assets, and there’s a narrative around the U.S. kicking off a trade war. If you believe that’s going to have a spillover effect on global trade—if you believe there’s going to be less global trade, much of which is denominated in U.S. dollars—then you’d expect lower demand for U.S. dollars.”

While cautious against extrapolating short-term trends, D'Agostino highlighted the potential of sovereign funds in stabilizing bitcoin’s valuation. Their sustained accumulation could help mitigate retail-driven volatility, positioning bitcoin as a mainstream institutional asset.

This dual approach echoes historical trends in gold, and according to Bitwise Chief Investment Officer, Matt Hougan, who recently spoke with Blockworks, people own gold ETFs and they own gold bars.

“The same thing is gonna be true here in crypto. They’re going to want to have a piece of the action in a way that gives them the broadest possible basket. But they’re also going to want to own some bitcoin directly, because they’re going to want to be able to control it.”

He added that while sovereigns may prioritize direct purchases for control, ETFs offer a "faster, easier button" for exposure.

“They’ll end up buying both.”