Previously, bitcoin had shown a strong rally towards the $49,000 mark, but the asset quickly recovered all the increase when the Coinbase premium turned negative.
bitcoin Coinbase Premium Gap Dives Negative Over the Past Day
As noted by CryptoQuant Netherlands community manager Maartunn in a mail At X, Coinbase's premium gap has now turned noticeably negative after being mostly positive for the past few days.
The “Coinbase premium gap” refers to the difference between bitcoin prices listed on cryptocurrency exchanges Coinbase (USD pair) and Binance (USDT pair).
The value of this indicator basically provides clues as to how the buying or selling behaviors on these two largest platforms in the sector differ from each other at the moment.
When the metric has a positive value, it means that the price listed on Coinbase is higher than Binance currently. This trend implies that users of the former platform engage in a higher number of purchases (or lower amounts of sales) than Binance users.
On the other hand, the fact that the indicator is positive suggests that Binance could be seeing a greater degree of buying pressure at the moment as the price quoted on the exchange is higher.
Now, here is a chart showing the trend in the bitcoin Coinbase premium gap since the beginning of the year:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/01/Bitcoin-Erases-49000-ETF-Rally-as-Coinbase-Users-Start-Selling.jpeg" alt="bitcoin Coinbase Premium Gap” width=”4096″ height=”2580″ loading=”lazy”/>
Looks like the value of the metric has taken a plunge during the past day | Source: @JA_Maartunn on X
As shown in the chart above, the Coinbase bitcoin premium gap has seen a sharp drop towards the negative territory over the past day. Before this drop, the indicator was mostly in positive values since the beginning of the year.
Previously there were also some drops into the red zone, but the indicator only reached minor negative values during these drops. This time, however, the premium has dropped to significantly negative levels.
This year's price increases were driven by Coinbase buyers, as the price also rose each time the premium. Coinbase is popularly known to be used by American institutional investors, so the green premium suggested that these large entities were buying, likely in anticipation of the ETFs, which finally gained approval on January 10.
Some time after this approval, btc rose sharply towards the $49,000 level, but the asset's run was very short-lived as its price plummeted sharply towards the price before the move, thus erasing all gains.
Coinbase's premium gap had been notably positive along with the rise, but the indicator then showed its fall into negative territory along with this rapid pullback. It would appear that some US institutional traders may have taken the opportunity to reap their profits.
btc Price
bitcoin has been moving sideways since the rapid rally and decline as its price is still floating around the $45,800 level.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/gsG1RvUw/" alt="bitcoin price chart” width=”1534″ height=”868″/>
The price of the coin seems to have shown an overall trend of consolidation recently | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Charts from TradingView.com, CryptoQuant.com
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