Anika Begay
Data shows that the Bitcoin Coinbase Premium Index has returned to positive territory, a sign that demand for BTC has returned from American investors.
Bitcoin Rebounds as Coinbase Premium Index Turns Green
As one analyst pointed out in a CryptoQuant Quicktake post, the Bitcoin Coinbase Premium Index recently jumped into positive territory after being negative during the crash.
The “Coinbase Premium Index” here refers to an indicator that tracks the percentage difference between the prices of Bitcoin listed on the cryptocurrency exchanges Coinbase (USD pair) and Binance (USDT pair).
When the value of this metric is positive, it means that the price of the asset listed on Coinbase is higher than that of Binance at this time. This trend implies that BTC is seeing greater buying pressure or less selling pressure on the former than on the latter.
On the other hand, an indicator below zero suggests that Coinbase platform users may participate in a greater number of sales than Binance users.
Here is a chart showing the performance of the Bitcoin Coinbase Premium Index over the past few months:
The value of the metric appears to have turned green in recent days | Source: CryptoQuant
As shown in the chart above, the Bitcoin Coinbase Premium Index had turned negative towards the end of July, when BTC’s drawdown began. The indicator then continued its decline until reaching significant red values, which led to the cryptocurrency’s recent crash.
The timing of this trend could suggest that Coinbase users had a role to play in the bearish price action. From the chart, it is visible that once the asset plunged to the lows, the indicator turned positive, meaning that a wave of buying appeared on the platform.
Since then, the Coinbase Premium Index has continued to be in the green region and the coin’s price has seen some recovery. Once again, it seems that Coinbase users have played a part in the asset’s trajectory.
In reality, this trend is not new, as the cryptocurrency has shown a relationship with the Coinbase Premium Index for most of the year.
Coinbase is known to be the platform of choice for American institutional entities, while Binance hosts global traffic, so the indicator can be considered a reflection of how the behavior of US-based whales differs from the rest.
So when its value changes polarity, one can assume that these large investors are changing their strategy. The metric is currently green, but it remains to be seen whether the same will be true in the coming days. If it is, Bitcoin may be able to continue its recovery, if the recent pattern is anything to go by.
BTC Price
Bitcoin had suffered a setback yesterday, with the price falling below $55,000, but the coin has already recovered, returning above $57,400.
Looks like the price of the coin has been steadily going up over the past few days | Source: BTCUSD on TradingView
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com
