Is A Major Bitcoin Dip Coming? What the Coinbase Index Tells Us

Samuel Edyme

10 months ago

3 mins read

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An analyst from the CryptoQuant QuickTake platform has now drawn attention to a particular trend tied to the Coinbase Premium Index (CPI) which currently suggests a grim move brewing for Bitcoin.

This indicator, when placed with its Simple Moving Average over 14 days (SMA14), has often shown a significant correlation with Bitcoin’s selling pressure, shedding light on how crucial its impact is on the market.

Bull or Bear: What the Coinbase Index Tells Us

Before diving into what the Coinbase Premium Index is currently signalling for Bitcoin, it is worth explaining further the essence of this indicator to grasp the credibility of it. Notably, the Coinbase Premium Index (CPI) is an analytical tool that measures the variance between Bitcoin’s price on Coinbase Pro and its price on other major exchanges.

A negative CPI value suggests that Bitcoin is trading at a lower price on Coinbase Pro compared to other platforms, which typically indicates a selling pressure in the US market.

According to the CryptoQuant analyst with the name ‘burakkesmeci,’ this phenomenon has been observed more frequently after the US approved the trading of spot exchange-traded funds (ETFs), which currently seems to have amplified the significance of CPI as a leading indicator.

When Coinbase Premium Index is below SMA14, selling pressure increases

“Examining the data for 2024, we clearly see that Bitcoin price corrections have occurred when the CPI (Coinbase Premium Index) fell below its’ SMA14.” – By @burak_kesmeci

Link 👇https://t.co/Bc3N1cfh5W pic.twitter.com/tN99LNhNkr

— CryptoQuant.com (@cryptoquant_com) July 30, 2024

The analyst disclosed that for 2024, the data reveals a clear pattern: Bitcoin often faces price corrections when the CPI dips below its SMA14. This specific behaviour points to a bearish sentiment when the index falls short of the moving average, signaling increased selling activity.

Currently, the CPI stands at -0.008, contrasting with the SMA14 at 0.020. This discrepancy according to burakkesmeci “indicates that sellers have a stronger hand in the US market.”

Bitcoin: Coinbase Premium Index. | Source: CryptoQuant

Bitcoin Market Performance

Looking at Bitcoin’s market performance so far, the phenomenon of a seller-driven market, as indicated by the CPI, appears to hold true. Currently, Bitcoin trades at a price of $65,805, marking a 3% dip in the past 24 hours and roughly 2% in the past week.

Bitcoin (BTC) price chart on TradingView — BTC price is moving downwards on the 1-hour chart. Source: BTC/USDT on TradingView.com

In the past day alone, the asset’s market cap has declined by over $40 billion, a stark contrast to its 24-hour trading volume, which has seen quite the opposite, surging from below $30 billion as of yesterday to as high as $36.7 billion, at the time of writing.

Regardless of the price performance, a handful of crypto analysts remain optimistic. For instance, Crypto Rover, a renowned enthusiast in the crypto space, disclosed that Bitcoin is currently just consolidating inside a notable bull flag pattern.

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. pic.twitter.com/oauSgiBNRY

— Crypto Rover (@rovercrc) July 30, 2024

Featured image created with DALL-E, Chart from TradingView

Samuel Edyme

Meet Samuel Edyme, Nickname - HIM-buktu. A web3 content writer, journalist, and aspiring trader, Edyme is as versatile as they come. With a knack for words and a nose for trends, he has penned pieces for numerous industry player, including AMBCrypto, Blockchain.News, and Blockchain Reporter, among others.

Edyme’s foray into the crypto universe is nothing short of cinematic. His journey began not with a triumphant investment, but with a scam. Yes, a Ponzi scheme that used crypto as payment roped him in. Rather than retreating, he emerged wiser and more determined, channeling his experience into over three years of insightful market analysis.

Before becoming the voice of reason in the crypto space, Edyme was the quintessential crypto degen. He aped into anything that promised a quick buck, anything ape-able, learning the ropes the hard way. These hands-on experience through major market events—like the Terra Luna crash, the wave of bankruptcies in crypto firms, the notorious FTX collapse, and even CZ’s arrest—has honed his keen sense of market dynamics.

When he isn’t crafting engaging crypto content, you’ll find Edyme backtesting charts, studying both forex and synthetic indices. His dedication to mastering the art of trading is as relentless as his pursuit of the next big story. Away from his screens, he can be found in the gym, airpods in, working out and listening to his favorite artist, NF. Or maybe he’s catching some Z’s or scrolling through Elon Musk’s very own X platform—(oops, another screen activity, my bad…)

Well, being an introvert, Edyme thrives in the digital realm, preferring online interaction over offline encounters—(don’t judge, that’s just how he is built). His determination is quite unwavering to be honest, and he embodies the philosophy of continuous improvement, or “kaizen,” striving to be 1% better every day. His mantras, “God knows best” and “Everything is still on track,” reflect his resilient outlook and how he lives his life.

In a nutshell, Samuel Edyme was born efficient, driven by ambition, and perhaps a touch fierce. He’s neither artistic nor unrealistic, and certainly not chauvinistic. Think of him as Bruce Willis in a train wreck—unflappable. Edyme is like trading in your car for a jet—bold. He’s the guy who’d ask his boss for a pay cut just to prove a point—(uhhh…). He is like watching your kid take his first steps. Imagine Bill Gates struggling with rent—okay, maybe that’s a stretch, but you get the idea, yeah. Unbelievable? Yes. Inconceivable? Perhaps.

Edyme sees himself as a fairly reasonable guy, albeit a bit stubborn. Normal to you is not to him. He is not the one to take the easy road, and why would he? That’s just not the way he roll. He has these favorite lyrics from NF’s “Clouds” that resonate deeply with him: “What you think's probably unfeasible, I've done already a hundredfold.”

PS—Edyme is HIM. HIM-buktu. Him-mulation. Him-Kardashian. Himon and Pumba. He even had his DNA tested, and guess what? He’s 100% Him-alayan. Screw it, he ate the opp.

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