Data shows that the Coinbase Bitcoin premium spread has turned negative recently. Here’s what that could mean for the asset’s price.
Bitcoin Coinbase Premium Gap Just Saw A Deep Drop
As An analyst in a CryptoQuant Quicktake article explained that the Coinbase Premium Gap has seen a rapid trend reversal recently. The “Coinbase Premium Gap” here refers to an indicator that tracks the difference between Bitcoin prices listed on Coinbase (USD pair) and Binance (USDT pair).
When the value of this metric is greater than zero, it means that the price of the asset listed on Coinbase is higher than that of Binance. Such a trend implies that users of the former are participating in a higher purchase amount or a lower sale amount than users of the latter.
On the other hand, the fact that the indicator is negative suggests that buying pressure on Coinbase might be lower than on Binance, as BTC is trading at a lower rate there.
Now here is a chart that shows the Bitcoin Coinbase Premium Gap trend over the past two days:
Looks like the value of the metric has been quite negative recently | Source: CryptoQuant
As seen in the chart above, the Bitcoin Coinbase Premium Gap has reached notable positive levels following the price recovery surge triggered by the US Federal Reserve (Fed) interest rate cut announcement.
This suggests that Coinbase users enthusiastically participated in purchases following the news. Coinbase is the leading platform for US-based investors, especially large institutional entities, so it makes sense that users would react to an American-specific event.
While the indicator was positive earlier, its value observed a deep drop into the negative zone today. This could potentially mean that US-based holders have just participated in a massive sell-off.
Bitcoin has had a close relationship with the Coinbase Premium Gap throughout 2024 so far, so this red spike could mean trouble for the asset’s price. That’s assuming the spike actually corresponds to selling by US institutional investors.
Another way to interpret the spike could be that a lot of buying happened on Binance, which is why the price on Coinbase was left behind.
Given that Bitcoin has not seen a significant price decline since this trend developed in the indicator, this scenario could even be the most likely one. However, the metric could still be one to watch shortly, as sustained forays into the negative zone have typically proven bearish for the price.
If the Coinbase premium gap remains negative and BTC continues to be unchanged, it would imply that a change in market structure has occurred, with Binance traders taking the lead, something that hasn’t happened too often this year.
BTC Price
At the time of writing, Bitcoin is trading around $62,700, up more than 5% from last week.
The price of the coin appears to have been going up over the last few days | Source: BTCUSDT on TradingView
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com
