Hidden Driver Of Bitcoin’s Rally: Coinbase Dominance Fades, Binance Takes The Lead

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As a seasoned researcher with years of immersion in the ever-evolving world of cryptocurrencies, I find myself constantly intrigued by the dynamic nature of this market. The insights provided by analysts like Mignolet are indeed enlightening and serve as crucial pieces to the puzzle that is Bitcoin‘s price movement.

In this current market cycle, it seems that Bitcoin (BTC) has demonstrated strong momentum. However, recent analyses hint that factors outside of Coinbase might be influencing the ongoing trend.

A researcher named Mignolet from CryptoQuant offered an extensive breakdown of the current Bitcoin market trends, highlighting the significant influence that prominent platforms such as Coinbase and Binance are having during this ongoing bull market phase.

Shifting Liquidity Dynamics And Exchange Roles

As a crypto investor, I recently came across an insightful analysis on the CryptoQuant QuickTake platform titled “Coinbase’s Influence on Bitcoin’s Price Movements Remains Modest.” This piece by Mignolet sheds light on the path Coinbase’s dominance has taken.

It was pointed out by the analyst that although Coinbase significantly contributed to the early stages of this year’s Bitcoin surge, its influence has since lessened. This change suggests a more widespread distribution of liquidity throughout the market, with Binance stepping up as a key contributor to maintaining the bullish trend.

Coinbase dominance remains low

Despite a surge expected in September-October, Coinbase’s dominance surprisingly decreased prior to this and hasn’t noticeably risen since then (as indicated by the red box).

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— CryptoQuant.com (@cryptoquant_com) December 11, 2024

Mignolet’s assessment suggests an important finding: The influence of Coinbase on spot trading, particularly in relation to Bitcoin’s ongoing surge, appears to have noticeably weakened during its second stage.

It was found through an examination that Bitcoin-related exchange-traded funds (ETFs) had been given the green light earlier this year, which resulted in increased trading on Coinbase.

The surge of funds significantly boosted Bitcoin’s price and shook up conventional assumptions about the halving cycle. Yet, as the rally went on, Coinbase’s impact began to diminish.

The analyst emphasized that while Coinbase remains a pivotal source of liquidity, Binance has assumed a more prominent role in the current market phase. Mignolet wrote:

Allow me to emphasize once more: While I’m not implying that the liquidity on Coinbase is trivial, it’s actually quite significant. However, I want to draw attention to another, potentially more crucial, aspect of liquidity – and that’s where Binance comes into play.

Remarkably, the increasing influence of Binance indicates that liquidity is coming from a broader range of players, helping to create a relatively decentralized and robust market setup.

This redistribution might signal a wider involvement of institutions and individual retail investors in Bitcoin, as they expand the variety of trading and investment platforms they use.

Bitcoin Sees Sharp Rebound

After a brief dip where its value fell below the $95,000 threshold, Bitcoin has experienced an unexpected surge.

Currently, as I’m typing this, the value of the asset has risen and surpassed the $100,000 threshold again, currently trading at $100,625. This represents a 4% price rise.

Currently, Bitcoin’s price surge has left it just 3.6% below its all-time high of around $103,000, which was reached earlier in November.

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2024-12-12 06:04