Bitcoin Coinbase Premium Is Negative Despite $68,000 Rally: What It Means

1 month ago 13

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Data shows the Bitcoin Coinbase Premium Index has remained negative during the rally to $68,000. Here’s what this could mean for the asset.

Bitcoin Coinbase Premium Index Is Currently Showing Red Values

As explained by an analyst in a CryptoQuant Quicktake post, the BTC Coinbase Premium Index is inside the negative zone right now. The “Coinbase Premium Index” is an indicator that measures the difference between the Bitcoin prices listed on the cryptocurrency exchanges Coinbase (USD pair) and Binance (USDT pair).

When the value of this metric is positive, it means the BTC price listed on Coinbase is currently higher than that on Binance. Such a trend suggests the former is observing a higher buying pressure (or a lower selling pressure) than the latter.

On the other hand, the negative indicator implies that Coinbase users are participating in a higher degree of selling than Binance ones, as the coin is trading at a lower rate there.

Now, here is a chart that shows the trend in the Bitcoin Coinbase Premium Index over the last few months:

The value of the metric appears to have been on the decline in recent days | Source: CryptoQuant

As displayed in the above graph, the Bitcoin Coinbase Premium Index has shown an interesting relationship with price until recently. It would appear that whenever the metric would assume positive values, the asset would rally, and whenever it would dip into the negative territory, the price would also plunge.

This pattern extends beyond the chart window, as 2024 in its entirety has generally shown the two moving with notable correlation. The trend naturally suggests that Coinbase users have been potential market drivers, as the changes in their behavior have been inducing price action.

Coinbase is the preferred platform of investors based in the US, especially large institutional entities, while Binance is the hub of global investors. As such, the index’s value tells us about how the behavior of American whales differs from the rest of the world.

While the US-based institutional investors have been key for much of 2024, the pattern appears to have diverged recently. The chart shows that as the latest rally in the Bitcoin price has occurred, the indicator’s value has been red.

This isn’t the only pattern that has been broken, as the index also tends to turn green whenever the spot exchange-traded funds (ETFs) witness inflows. The spot ETFs have seen significant net inflows recently, but the metric’s value has not flipped.

“This raises the question of whether investors on Binance, whether retailers, institutions, or whales, are surpassing the buying pressure on Coinbase Pro,” notes the quant.

It remains to be seen if the index and the price will continue to show a divergence shortly, implying a possible shift in market structure away from being Coinbase-dominated, or if it’s just a temporary deviation.