Bitcoin Coinbase Premium Continues to Decline, Is the Buying Pressure Ending?
Data shows that Bitcoin Coinbase Premium has fallen recently, suggesting that buying pressure may be easing from US investors.
The Bitcoin Coinbase Premium Index has declined in recent days
An analyst in a CryptoQuant post pointed out that the market may be shifting towards a more balanced sentiment now. “Coinbase Premium Index” is an indicator that measures the percentage difference between the price of Bitcoin listed on the cryptocurrency exchange Coinbase and that listed on Binance.
Typically, Coinbase receives traffic based heavily in the US, while Binance has a more global audience. This metric’s value can provide insight into which demographics buy or sell more of the asset.
When the indicator’s value is positive, the price quoted on Coinbase is currently higher than on Binance. Such a trend suggests that US investors may provide more buying pressure (or at least a lower selling pressure) to BTC than global users.
On the other hand, negative values of the metric suggest that BTC is selling at a discount on Coinbase right now, suggesting relatively higher selling pressure from US-based investors.
Now, here is a chart showing the trend of the Bitcoin Coinbase Premium Index over the last few months:
The value of the metric seems to have been declining in recent days | Source: CryptoQuant
As shown in the graph above, the Bitcoin Coinbase Premium Index had risen to some pretty high values earlier in the month as the asset’s price had plunged below the $20,000 mark.
This suggests that there was a large amount of buying by US-based investors at these lows. The indicator stayed at these super high values until the price increased sharply.
The timing of this could mean that the buying pressure from these holders provided the fuel for the price to bottom and the rally to start again. After the price increased rapidly, the value of the metric began to fall, which means that the purchase began to slow down, or that a new sell had just started.
The Bitcoin Coinbase Premium Index remained at relatively high positive levels, allowing the price to continue its upward trajectory. However, the metric has observed a further drop in the past week.
The chart shows that the indicator is still positive, but its magnitude is much lower. “Interestingly, the current buying pressure is easing, which could indicate a shift in sentiment towards a more balanced market,” explains the quant.
The analyst has also attached the chart for another indicator, the Korea Premium Index, which measures the difference in prices quoted on South Korean exchanges and those on foreign ones.
Looks like the metric has a positive value | Source: CryptoQuant
This indicator has also been positive throughout most of the rally, suggesting that Korean investors have been busy buying. Even now, while the Coinbase Premium Index has fallen, this metric has yet to see such a significant decline.
BTC price
At the time of writing, Bitcoin is trading around $27,900, up 7% in the past week.
BTC hasn't moved much in the last few days | Source: BTCUSD on TradingView
Featured Image by Kanchanara at Unsplash.com, Charts by TradingView.com, CryptoQuant.com
