Bitcoin Coinbase Premium Drops But Still With Green Values, Bullish Signal?
Data shows that Bitcoin Coinbase Premium has seen some decline, but the metric remains at very positive values, a sign that could be bullish for the price.
The Bitcoin Coinbase Premium Index has registered a decline recently
As pointed out by an analyst in a CryptoQuant post, the BTC Coinbase Premium Index hit a new all-time high just a few days ago. The “Coinbase Premium Index” here is an indicator that measures the percentage difference between the Bitcoin price listed on Coinbase and that on Binance.
Typically, Binance receives global traffic, while the Coinbase user base is more heavily dominated by US-based investors. Large American institutions in particular are popularly known to prefer the exchange.
This means that the Coinbase Premium Index can give us an idea of which of the user bases are currently buying more (or selling more) of the cryptocurrency.
When the value of this metric is positive, it means that the price listed on Coinbase is higher than on Binance right now. This type of trend implies that US investors are putting on a higher buying pressure (or alternatively putting on a lower selling pressure) compared to users around the world.
On the other hand, the metric with negative values suggests that a higher degree of selling has taken place by US investors than the global Binance user base.
Now, here’s a chart showing how the Bitcoin Coinbase Premium Index has changed recently:
The value of the metric seems to have been quite high in recent days | Source: CryptoQuant
As shown in the graph above, the Bitcoin Coinbase Premium Index shot up inside the positive zone when the Silicon Valley Bank debacle took place a few days back. During this peak, the indicator set a new all-time high of about 1, meaning the price quoted on Coinbase was around 1% higher than on Binance.
Shortly after the metric began to rise, the price of the cryptocurrency also began to rise. This was a sign that the buying pressure from US investors on Coinbase was a factor in the asset’s value increasing.
However, after the price peaked above $26,000, the Coinbase Premium Index began to slide and the indicator has now fallen to just under 0.4 as the BTC price has also seen a plunge below the $25,000 level.
The fact that the buying pressure that fell on Coinbase was followed by the price also seeing a decline may be further evidence that it was indeed the rally from the US investors that drove the rally.
Nevertheless, even with the decline, the indicator’s value is still quite positive, which means that the buying pressure has not completely disappeared yet. This could be a bullish sign for the asset’s price, as it could show that some US investors still support the potential for the cryptocurrency’s growth to continue.
BTC price
At the time of writing, Bitcoin is trading around $24,800, up 15% in the past week.
BTC has retraced from the above $26,000 high | Source: BTCUSD on TradingView
Featured image from Aleksi Räisä at Unsplash.com, Charts from TradingView.com, CryptoQuant.com
