Data shows that the Coinbase Premium bitcoin Index has turned negative once again, a sign that could prove bearish for the asset's price.
Coinbase bitcoin Premium Index Has Dived Into Red Territory
As one analyst noted in a mail At X, selling pressure on Coinbase has increased recently. The indicator of interest here is the “Coinbase Premium Index,” which measures the percentage difference between bitcoin prices listed on cryptocurrency exchanges Coinbase and Binance.
When the value of this metric is positive, it means that the price listed on Coinbase is higher than Binance at the moment. Such a trend implies that the buying pressure on the former is greater than that of the latter or the selling pressure is lower.
On the other hand, a negative value implies that Coinbase may be experiencing greater selling pressure currently, as the price indicated here is lower than on Binance.
Now, here is a chart showing the trend in the Coinbase Premium bitcoin Index over the past few months:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/02/Bitcoin-Sellers-Return-to-Coinbase-Will-Price-Drop-Continue.jpeg" alt="bitcoin Premium Index Coinbase” width=”2048″ height=”1290″/>
The value of the metric appears to have just turned red | Source: @IT_Tech_PL on X
As shown in the chart above, the Coinbase bitcoin Premium Index had been notably positive previously and along with these high values, the price of the cryptocurrency had recovered.
This would imply that the relatively high buying pressure on the platform may have contributed to the coin's rise. Once the indicator cooled to low (but still positive) values, the price fell into a sideways movement.
The Coinbase Premium index has recently reached completely negative values, implying that sellers have potentially appeared on the exchange. The last time the indicator turned red was during the ETF news selling event, which did not end well for the coin.
Coinbase is popularly known to be used by US-based institutional investors, so the Premium Index can tell us how the behavior of these large entities differs from that of Binance's global user base.
The latest rally was driven by purchases of institutional entities such as ETFs, which is why the metric had been positive. But it appears that the buying pressure from these investors has already run out as sellers have moved ahead.
Going by previous precedents, this drop into negative territory could mean that bitcoin would at least continue to consolidate, if not record an outright drop.
However, a bearish outcome can be avoided if the Coinbase Premium index returns to positive territory in the coming days. It remains to be seen if this selling pressure from American whales is the beginning of a new trend or if it is just temporary.
btc Price
At the time of writing, bitcoin is trading around $50,900, down 2% from last week.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/02/Bitcoin-Sellers-Return-to-Coinbase-Will-Price-Drop-Continue" alt="bitcoin price chart” width=”1534″ height=”854″/>
Looks like the price of the coin has been moving sideways in the last few days | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, CryptoQuant.com, Chart from TradingView.com
