Data shows the Bitcoin Coinbase Premium has seen some decline, but the metric remains at very positive values, a sign that may be bullish for the price.
Bitcoin Coinbase Premium Index Has Registered A Decrease Recently
As pointed out by an analyst in a CryptoQuant post, the BTC Coinbase Premium Index hit a new all-time high just a few days ago. The “Coinbase Premium Index” here is an indicator that measures the percentage difference between the Bitcoin price listed on Coinbase and that on Binance.
Usually, Binance receives global traffic, while the Coinbase userbase is more heavily dominated by investors based in the US. Large American institutions, especially, are popularly known to prefer the exchange.
This means that the Coinbase Premium Index can give us an idea about which of the userbases are currently buying more (or selling more) of the cryptocurrency.
When the value of this metric is positive, it means the price listed on Coinbase is more than that on Binance right now. This kind of trend implies that US investors are putting a higher amount of buying pressure (or alternatively, they are applying a lower amount of selling pressure) compared to the worldwide users.
On the other hand, the metric having negative values suggests a higher degree of selling has been taking place by the American investors than the global Binance userbase.
Now, here is a chart that shows how the Bitcoin Coinbase Premium Index has changed recently:
The value of the metric seems to have been quite high in recent days | Source: CryptoQuant
As displayed in the above graph, the Bitcoin Coinbase Premium Index shot up inside the positive zone as the Silicon Valley Bank debacle took place a few days back. During this spike, the indicator set a new all-time high of about 1, which means that the price listed on Coinbase was around 1% more than on Binance.
Shortly after the metric started to surge, the price of the cryptocurrency also began to lift off. This was a sign that the buying pressure from the US investors on Coinbase was a factor in the asset’s value shooting up.
After the price peaked above $26,000, however, the Coinbase Premium Index started sliding off, and the indicator has now fallen to just under 0.4 as the BTC price has also observed a plunge below the $25,000 level.
The fact that the buying pressure dropping off on Coinbase was followed by the price also seeing a decline may be further evidence that it was indeed the accumulation from the American investors that was fueling the surge.
Nonetheless, even with the decline, the indicator’s value is still pretty positive, which means that the buying pressure hasn’t completely disappeared yet. This could be a bullish sign for the asset’s price, as it may show that some US investors are still backing the potential of the cryptocurrency’s rise to continue.
At the time of writing, Bitcoin is trading around $24,800, up 15% in the last week.
BTC has retraced from the above $26,000 high | Source: BTCUSD on TradingView