As a seasoned crypto investor with a knack for deciphering market trends and a keen interest in institutional behavior, I find this recent development in the Bitcoin Coinbase Premium Index quite intriguing. The index’s sharp decline into the negative region could be a sign of selling pressure from institutional investors on Coinbase, which historically has been followed by price declines. However, the pattern of the index rebounding when it reaches the -0.2% mark gives me hope that we might be nearing or even at the bottom already.
A quant has explained how the latest trend in the Bitcoin Coinbase Premium Index could imply a buying opportunity for the asset.
Bitcoin Coinbase Premium Index Has Plunged To -0.221%
As a researcher, I recently delved into the latest advancements in the Bitcoin market by examining the CryptoQuant Quicktake post. In this context, the “Coinbase Premium Index” is a valuable tool that calculates the percentage disparity between the BTC price on Coinbase (traded against USD) and its price on Binance (traded against USDT).
If the figure for this metric is greater than zero, it indicates that the cryptocurrency is being traded at a higher price on Coinbase than on Binance. This situation suggests that there’s more demand to buy (higher buying pressure) or less desire to sell (lower selling pressure) on Coinbase compared to Binance.
Conversely, the fact that the indicator falls below zero implies that Binance users might be involved in more purchasing activities compared to Coinbase users. This could be why Bitcoin’s value has risen more on Binance than it has on Coinbase.
Here’s a graph illustrating the recent fluctuations in the Bitcoin Coinbase Premium Index:
It’s clear from the graph that the Bitcoin Coinbase Premium Index has experienced a significant drop into negative territory lately, indicating an increase in sellers on Coinbase.
Simultaneously with this increase in sales, Bitcoin’s price has also experienced a drop, hinting that the negative premium could be responsible for it. Interestingly, throughout the year, the cryptocurrency seems to mirror the indicator, moving up and down in tandem with buying and selling fluctuations on Coinbase.
“This relationship might stem from the fact that Coinbase serves as a hub for U.S.-based institutional investors, who have been quite influential in the market throughout this year.
At present, the Coinbase Premium Index showing red suggests that large-scale investors might be offloading their holdings. Given that Bitcoin’s price has been correlated with this index, such a trend could serve as a bearish indicator for the cryptocurrency.
A different scenario for Bitcoin might materialize based on another pattern that we’ve noticed. The analyst has pointed out in the chart that this metric tends to bounce back whenever it reaches the -0.2% level over the past year.
It’s often the case that new buyers appear when the level of trading is around this point, choosing to buy during a dip which subsequently causes both the metric and the price to increase.
If the current reading of the indicator stands at -0.221%, it might signal that Bitcoin could be approaching its lowest point, or perhaps it has already found a bottom. However, this prediction assumes that large-scale investors believe the bull market is yet to end.
BTC Price
Yesterday, Bitcoin dipped below the $93,000 mark, but it appears to have bounced back, currently being traded at approximately $94,100.
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2024-12-25 01:16