Coinbase Premium Turned Negative, Here’s What It Means For BTC Price



The ultimate breakout of Bitcoin (BTC) above $ 50,000 might have to wait longer to come true, as the spot buying pressure on Coinbase Pro shows signs of weakness, at least in the short term.

The Coinbase Premium Index, measuring the difference between the price of BTC on Coinbase Pro and Binance, has turned to the downside, according to CryptoQuant. Simply put, the selling pressure on Coinbase appears to be increasing compared to other exchanges like Binance.

Usually, A negative reading on the Coinbase Premium Index is a precursor to short-term resistance. On the other hand, when the premium is high, it indicates strong spot buying pressure on Coinbase.

Based on the index, the CEO of CryptoQuant, Ki Young Ju, believe that exceeding $ 50,000 “seems very difficult” in the short term.

“The current buying power does not come from Coinbase”, added. “There is no more Coinbase premium compared to Binance / Huobi / OKEx. Be careful.”

Coinbase has become a major indicator of demand for Bitcoin due to its popularity with large institutional buyers. These market participants acquire their BTC through Coinbase Pro’s over-the-counter (OTC) markets. Although these large purchases do not have an immediate impact on the price of BTC, they mean a growing demand for the digital asset and, in turn, a decrease in circulating supply.

A short-term fluctuation in Coinbase’s premium does not appear to have any relation to the long-term trajectory of Bitcoin. The digital asset remains on a strong uptrend, having peaked beyond $ 49,700 early Sunday morning., according to TradingView data.

The price of Bitcoin has risen a staggering 28% in the last week, thanks in large part to the planned acquisition of the asset by Tesla. According to the latest 10K report that the electric vehicle maker filed with the U.S. Securities and Exchange Commission, plans to allocate approximately 7.7% of its cash balance to Bitcoin.

Publicly traded companies and fund managers own about 6% of the circulating supply of Bitcoin, a figure that does not include Tesla’s $ 1.5 billion position.

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