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Data shows that the Coinbase Premium bitcoin Index has remained negative during the rally to $68,000. Here's what this could mean for the asset.
Coinbase bitcoin Premium Index Currently Showing Red Values
As explained by an analyst at CryptoQuant Quicktake mailThe 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 the cryptocurrency exchanges Coinbase (USD pair) and Binance (USDT pair).
When the value of this metric is positive, it means that the btc price listed on Coinbase is currently higher than that on Binance. This 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 engage in a higher degree of selling than Binance users, as the coin trades at a lower rate there.
Now, here is a chart showing the trend in the Coinbase Premium bitcoin Index over the past few months:
As shown in the chart above, the Coinbase Premium bitcoin Index has shown an interesting relationship with price until recently. It would seem that every time the metric assumed positive values, the asset would rally, and every time it fell into negative territory, the price would also plummet.
This pattern extends beyond the chart window, as 2024 as a whole has generally shown the two moving with notable correlation. The trend naturally suggests that Coinbase users have been potential market drivers, as changes in their behavior have induced price action.
Coinbase is the preferred platform for US-based investors, especially large institutional entities, while Binance is the hub for global investors. As such, the index value tells us how the behavior of American whales differs from that of the rest of the world.
While US-based institutional investors have been key for much of 2024, the pattern appears to have diverged recently. The chart shows that as the latest rally in bitcoin price occurred, the indicator value was in the red.
This is not the only pattern that has been broken as the index also tends to turn green whenever spot exchange-traded funds (ETFs) witness inflows. Spot ETFs have seen significant net inflows recently, but the value of the metric has not changed.
“This raises the question of whether investors in Binance, whether retail, institutions or whales, are overcoming the buying pressure on Coinbase Pro,” the quant notes.
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It remains to be seen if the index and price will continue to show a divergence soon, implying a possible change in market structure away from being dominated by Coinbase, or if it is just a temporary deviation.
btc Price
bitcoin has continued its recent bullish momentum over the past day as its price has now reached $68,000.
Dall-E Featured Image, CryptoQuant.com, TradingView.com Chart
