The strength in the Bitcoin Coinbase premium that propelled the recent rally above $70,000 has dissipated, suggesting that buying is already slowing.
Bitcoin Coinbase Premium Gap Returns to Neutral Level
CryptoQuant Netherlands Community Manager Maartunn explains: post At X, we see that Bitcoin's Coinbase premium gap is decreasing towards the neutral line.
“Coinbase Premium Gap” here refers to an indicator that tracks the difference in BTC prices listed on the virtual currency exchanges Coinbase (USD pair) and Binance (USDT pair).
If the value of this indicator is positive, it means that the price listed on Coinbase is higher than the price on Binance at the moment. Such a trend means that the buying pressure on the former is higher than the buying pressure on the latter platform (or just the selling pressure is lower).
On the other hand, a negative value means that the selling pressure on Coinbase is high as the prices of the cryptocurrencies listed on Coinbase are lower than on Binance.
Now, here is a chart showing the trend of Bitcoin Coinbase Premium Gap over the past few days.
The value of the metric appears to have been close to the neutral line recently | Source: @JA_Maartun on X
This chart shows that the Bitcoin Coinbase Premium Gap has become noticeably positive due to the recent rise in asset prices. But since then, the indicator has declined and its value has approached zero.
Buying pressure on the platform appears to have contributed to the sharp rise. The fact that the rally has slowed since the index returned to neutral levels may provide further evidence.
However, this is not unnatural for this year, as the Bitcoin price and Coinbase premium gap have shown a fairly tight relationship since the beginning of 2024.
While Coinbase is widely known as the platform of choice for American institutional investors, Binance hosts more global traffic. Premium value therefore provides insight into how the behavior of US-based large holders differs from that of global users.
Since Coinbase's premium gap has been the driving force behind the recent price surge, purchases from these institutions may have been the driving force.
The indicator value is approaching the neutral mark, which means these whales have taken their foot off the gas. Given that this indicator and BTC price have been closely related recently, it may be worth paying attention to how the situation develops in the coming days.
If the premium turns into the red from here, BTC may record some decline. Naturally, a sustained positive value is a bullish sign.
BTC price
At the time of writing, Bitcoin is trading near the $70,100 level, having risen over 11% over the past week.
Looks like the value of the asset has been going up over the last few days | Source: BTCUSD on TradingView
Featured image of Kanchanara on Unsplash.com, CryptoQuant.com, Charts on TradingView.com
