As a seasoned crypto investor with over a decade of experience in this wild and unpredictable market, I’ve seen my fair share of bull runs, bear markets, and everything in between. The recent analysis by ‘burakkesmeci’ on the Coinbase Premium Index (CPI) has certainly piqued my interest, given its historical correlation with Bitcoin’s selling pressure.
A specialist from the CryptoQuant QuickTake platform has recently highlighted an intriguing pattern related to the Coinbase Premium Index (CPI), indicating that there could be a potentially negative development upcoming for Bitcoin.
As a crypto investor, I’ve noticed that when this specific indicator aligns with its 14-day Simple Moving Average (SMA14), it frequently reveals a strong connection to Bitcoin’s selling pressure. This insight underscores the substantial influence this indicator has on the cryptocurrency market.
Bull or Bear: What the Coinbase Index Tells Us
Before delving into the current signals from the Coinbase Premium Index regarding Bitcoin, let’s clarify what this indicator represents to understand its reliability. In essence, the Coinbase Premium Index (CPI) is a useful tool that compares Bitcoin’s price on Coinbase Pro with its price on other significant exchanges, showing the difference between them.
A CPI (Consumer Price Index) value less than zero for Bitcoin on Coinbase Pro implies that it’s being traded at a reduced cost there compared to other markets. This often signifies increased selling pressure within the U.S. market.
Related Reading: Bitcoin Eyes $63,000: Key Indicators Signal Further Decline – Time To Sell?
Based on observations by crypto analyst ‘burakkesmeci,’ there’s been an increase in this occurrence following the U.S.’s approval of trading for spot ETFs. This appears to have boosted the importance of Consumer Price Index (CPI) as a key predictor.
When Coinbase Premium Index is below SMA14, selling pressure increases
Looking at the data for 2024, it’s evident that drops in the Bitcoin price have taken place whenever the Coinbase Premium Index (CPI) dipped beneath its 14-day moving average (SMA14).
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— CryptoQuant.com (@cryptoquant_com) July 30, 2024
As someone who has closely followed and invested in Bitcoin for several years now, I have noticed a consistent pattern that could be useful for other investors to consider. From my observations, it appears that Bitcoin tends to undergo price corrections when the Consumer Price Index (CPI) dips below its Simple Moving Average 14 (SMA14). This behavior suggests a bearish sentiment when the index falls short of the moving average, signaling increased selling activity among investors. I believe this pattern could be an important factor to take into account when making investment decisions related to Bitcoin.
At present, the Consumer Price Index (CPI) is sitting at -0.008, whereas the Short-term Moving Average 14 (SMA14) is at 0.020. This difference, as explained by burakkesmeci, suggests that sellers hold more power in the US market.
Bitcoin Market Performance
Analyzing Bitcoin’s market behavior up to now, it seems that the trend suggested by the Consumer Price Index (CPI) – a seller-dominated market – is indeed valid. Presently, one Bitcoin is being sold for around $65,805, representing a 3% decrease over the last day and approximately 2% drop in the past week.
Yesterday’s market value of the asset dropped by more than $40 billion, which is a significant decrease. However, its 24-hour trading volume has noticeably increased instead, going up from less than $30 billion yesterday to as much as $36.7 billion at this moment.
Despite varying opinions on price performance, several cryptocurrency analysts continue to express optimism. For example, well-known figure in the crypto world, Crypto Rover, recently revealed that Bitcoin is presently consolidating within an impressive bull flag pattern, suggesting potential future growth.
According to Rover, “This is the worst time to be bearish. The breakout will be massive.”
#Bitcoin is basically consolidating in one of the largest bull flags I’ve ever seen.
This is the worst time to be bearish.
The breakout will be massive.
— Crypto Rover (@rovercrc) July 30, 2024
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2024-07-31 06:05