Data shows that the Bitcoin Coinbase Premium Index remained negative during the rally to $68,000. See what this could mean for the asset.
The Bitcoin Coinbase Premium Index is currently showing red values
As explained by an analyst in a CryptoQuant Quicktake publishThe BTC Coinbase Premium Index is within the negative zone at the moment. The “Coinbase Premium Index” is an indicator that measures the difference between Bitcoin prices listed on cryptocurrency exchanges Coinbase (USD pair) and Binance (USDT pair).
When the value of this metric is positive, it means that the price of BTC listed on Coinbase is currently higher than that on Binance. Such a trend suggests that the former is seeing higher buying pressure (or lower selling pressure) than the latter.
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On the other hand, the negative indicator implies that Coinbase users are participating in a greater degree of selling than those on Binance, as the coin is trading at a lower rate there.
Now, here is a chart showing the trend of the Coinbase Premium Bitcoin Index over the past few months:
As shown in the chart above, the Bitcoin Coinbase Premium Index has shown an interesting relationship with price until recently. It would seem that whenever the metric assumed positive values, the asset would rise, and whenever it dipped into negative territory, the price would also fall.
This pattern extends beyond the chart window, as 2024 in its entirety generally showed both movements with notable correlation. The trend naturally suggests that Coinbase users have been potential market drivers, as changes in their behavior have been driving price action.
Coinbase is the platform of choice for US-based investors, especially large institutional entitieswhile Binance is the hub for global investors. As such, the index value tells us how the behavior of American whales differs from the rest of the world.
While US-based institutional investors have been instrumental throughout much of 2024, the pattern appears to have diverged recently. The graph shows that as the last rise in the price of Bitcoin occurred, the indicator value turned red.
This is not the only pattern that has been broken, as the index also tends to turn green whenever the spot exchange-traded funds (ETFs) witness influxes. Spot ETFs have seen significant net inflows recently, but the value of the metric has not changed.
“This raises the question of whether Binance investors, whether retailers, institutions or whales, are overcoming the buying pressure on Coinbase Pro,” the quant notes.
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It remains to be seen whether the index and price will continue to diverge soon, implying a possible change in the market structure, no longer dominated by Coinbase, or whether it is just a temporary deviation.
BTC Price
Bitcoin continued its recent upward momentum during the previous day as its price has now reached $68,000.
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com