Recent data indicates that the Bitcoin Coinbase Premium Gap has turned negative. Here’s what this development could imply for the price of the asset.
Recent Significant Decline in the Bitcoin Coinbase Premium Gap
As highlighted by an analyst in a CryptoQuant Quicktake post, the Coinbase Premium Gap has recently experienced a swift trend reversal. The “Coinbase Premium Gap” refers to an indicator that tracks the price difference of Bitcoin on Coinbase (USD pair) compared to Binance (USDT pair).
A positive value for this metric indicates that the price on Coinbase is higher than that on Binance. This trend suggests that Coinbase users are either buying more or selling less than their Binance counterparts.
Conversely, a negative indicator suggests that buying pressure on Coinbase is likely lower than on Binance, as BTC is being traded at a lower price there.
Below is a chart demonstrating the trend of the Bitcoin Coinbase Premium Gap over the past few days:
The metric's value has significantly dipped into the negative recently | Source: CryptoQuant
The above graph indicates that following the price recovery triggered by the announcement of the US Federal Reserve (Fed) interest rate cut, the Bitcoin Coinbase Premium Gap had notably surged into positive territory.
This suggests that users on Coinbase eagerly engaged in buying activities in response to the news. Given that Coinbase is predominantly used by US investors, particularly large institutional ones, it is logical for them to respond to events specific to the United States.
However, despite its previous positivity, the indicator has plunged significantly into negative territory today. This could indicate that American holders are now involved in a selloff.
This year, Bitcoin’s price has closely aligned with the Coinbase Premium Gap, so this recent dip could pose challenges for the asset’s value, assuming it reflects selling by American institutional investors.
Alternatively, this spike might imply substantial buying activity on Binance, leaving the price on Coinbase lagging.
Since Bitcoin has largely avoided significant bearish movements during the emergence of this trend, the latter interpretation might be more plausible. Nonetheless, it’s essential to monitor this metric closely; prolonged negative territory has historically been a bearish signal for the price.
If the Coinbase Premium Gap stays negative while BTC remains stable, it would suggest a shift in market dynamics, with Binance traders taking precedence—a trend that has rarely occurred in 2023.
Current BTC Price
As of this writing, Bitcoin is trading at approximately $62,700, reflecting an increase of over 5% in the past week.
The price of Bitcoin appears to have been on an upward trend in recent days | Source: BTCUSDT on TradingView
Image courtesy of Dall-E, CryptoQuant.com, chart from TradingView.com