Data shows that the bitcoin premium gap on Coinbase has recently turned negative. Here's what this could mean for the asset's price.
bitcoin Premium Gap Coinbase Just Experienced a Deep Drop
As An analyst at a CryptoQuant Quicktake post explainedCoinbase's premium gap has seen a rapid trend reversal Recently, the term “Coinbase Premium Gap” refers to an indicator that records the difference between bitcoin prices listed on Coinbase (USD pair) and Binance (USDT pair).
When the value of this metric is greater than zero, it means that the price of the asset listed on Coinbase is higher than that on Binance. This trend implies that users of the former are participating in a greater amount of buying or a smaller amount of selling than users of the latter.
On the other hand, the negative indicator suggests that buying pressure on Coinbase may be lower than on Binance as btc is trading at a cheaper price there.
Now, here is a chart showing the trend in the Coinbase bitcoin premium gap over the past few days:
<img data-recalc-dims="1" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/09/Coinbase-Premium-Bitcoin-Price-Turns-Deep-Red-What-Does-It.png" alt="Coinbase Premium Gap on bitcoin” width=”1280″ height=”719″/>
Looks like the value of the metric has been quite negative recently | Source: CryptoQuant
As shown in the chart above, the bitcoin Coinbase premium gap had increased to notable positive levels following the recovery momentum in price driven by the US Federal Reserve (Fed) interest rate cut announcement.
This suggests that Coinbase users were eagerly engaged in buying after the news broke. Coinbase is the primary platform for US-based investors, especially large institutional entities, so it makes sense that users would react to a US-specific event.
While the indicator had been positive previously, its value has experienced a deep drop into the negative zone today. This could imply that US-based holders have just engaged in a wave of selling.
bitcoin has maintained a close relationship with the Coinbase premium gap throughout 2024 so far, so this red spike could spell trouble for the asset’s price. This is assuming that the spike does indeed correspond to selling by US institutional investors.
Another way to interpret the spike could be that there has been a lot of buying on Binance, so the price on Coinbase has lagged behind.
Given that bitcoin has not seen any significant bearish action since this trend developed on the indicator, this scenario may even be the most likely one. However, we could still keep an eye on the metric shortly, as prolonged forays into the negative zone have generally proven to be bearish for the price.
If Coinbase’s premium gap remains negative and btc remains unaffected, then it would imply that a shift in market structure has occurred, with Binance traders taking the lead, something that hasn’t happened this year too often.
btc Price
At the time of writing, bitcoin is trading around $62,700, up more than 5% in the past week.
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The price of the coin appears to have been going up over the last few days | Source: BTCUSDT on TradingView
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com
