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bitcoin price buy sell signal
Nexo Logo

Spot Versus Tether Exchanges: Can Bitcoin Price Itself Be a Buy or Sell Signal

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin, Cryptocurrency news
Reading Time: 3 mins read
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Could the price difference between Bitcoin price on spot platforms like Coinbase and Tether-based platforms like Binance offer investors insight into if the crypto asset is currently a buy or a sell?

Data from past price action suggests its possible, and could even be an accurate signal for traders to follow.

Bitcoin Price Buy and Sell Signals Based on Exchange Spread

Throughout Bitcoin’s recent transition from bear market into bull market, then back into bearish price action, the market has moved in strange, unexpected ways. For example, despite the crypto asset’s continued downtrend, it also experienced the third-largest single-day gain in its young, decade-long history, skyrocketing from $7,400 to $10,500 in a little over 24 hours.

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It’s caused traders and analysts alike to consider every metric, every data point possible, as a way to attempt to predict future price movements in Bitcoin, as unpredictable as they may be.

Traders have reviewed everything from the crypto asset’s hash rate, scarcity, inflows and outflows. Nearly every possible data point has been heavily scrutinized by dozens of investors and analysts trying to crack Bitcoin’s peculiar code.

However, the answer could be in Bitcoin price itself – specifically in the discrepancy between the price of the leading cryptocurrency by market cap on spot exchanges such as Coinbase or Gemini, versus the price per BTC on Tether-based crypto exchanges like industry-leader Binance.

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Binance relies on base Bitcoin pairs with USDT, versus proper fiat USD like Coinbase and others do. And there could be clues to market behavior depending on the ebb and flow of the gap that rises and falls between the two types of crypto trading pairs.

Data suggests, that spot Bitcoin prices often exceed the price of USDT trading activity during bullish movements, and the inverse is for bearish price movements.

In the below example, Bitcoin reached a low of $9107 on Coinbase and a low of $9159 on Binance on July 28, 2019, representing a roughly $50 spread in favor of the Tether-based pair. Just four days later, the spread between the two had shrunken to just a $9 difference as price action became more and more bullish.

As the bullish price action continued, so did the rise in BTC/USD prices over BTC/USDT prices, and just prior to the final spike upward, the discrepancy finally leaned in favor of the price on Coinbase being higher than Binance, reaching $11,000 while Binance lingered at $10,926 for a nearly $75 discrepancy.

According to the data, it would suggest that as the gap between Coinbase and Binance shrunk, the stronger the buy signal in Bitcoin.

The opposite can also be seen to be true. In the below example of bearish price action, following the China news pump that led to historic gains, Bitcoin made another attempt to break out higher but stopped at a peak of $9597 on Coinbase, and at the same time, $9524 on Binance, representing yet another $75 gap between the two, showing that buyers were still bullish at Bitcoin’s local top.

As the Bitcoin price action turned bearish, however, the gap eventually diminished, then grew again, next time favoring Binance.

The idea is that when new money and actual buying begins, it’s driven by USD coming in from spot-based crypto exchanges like Coinbase, whereas any price action on Binance and USDT-based platforms, is simply crypto capital waiting on the sidelines to trade.

The difference between the two behaviors can be easily spotted by watching for discrepancies in the prices of the two platforms. However, any information provided is simply for informational purposes, could be coincidental and should not be considered investment advice.

Tags: bearbitcoinBullbuy. sellcryptoSignal
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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