Data shows Coinbase’s Bitcoin premium index has picked up recently. Here’s what that means for cryptocurrency prices.
Bitcoin 30-Day SMA Coinbase Premium Index Shows Rapid Surge
As indicated by analysts in the CryptoQuant post, volatility may increase for the coin in the future. “Coinbase premium index” is an indicator that measures the difference between the Bitcoin price listed on Coinbase Pro (USD pair) and that listed on Binance (USDT pair).
Since Coinbase is an exchange popularly used by investors based in the US (especially large institutions), the premium index can give an indication of how the buying behavior of American investors today differs from Binance’s user base (which is more globally oriented).
When the index has a value greater than zero, it means that the price listed on Coinbase is higher than on Binance today. The trend suggests that US investors are putting more buying pressure on the market than global investors today because they are willing to pay higher.
On the other hand, an indicator with a negative value indicates that American investors are selling more than global holders today (or alternatively, they are simply buying at a lower rate).
Now, here’s a chart showing the trend in Coinbase’s Bitcoin Coinbase 30-day premium index moving average (SMA) over the last few days:
Looks like the 30-day SMA value of the metric has shot up in the past day | Source: CryptoQuant
As shown in the chart above, Coinbase’s 30-day Bitcoin SMA premium has fallen to negative values while the price of the cryptocurrency has fallen sharply below $22,000 in the past few days. This means US investors are taking part in a higher level of selling around this drawdown.
However, in the days after the price drop, the value of the indicator remained at a slightly positive value, which indicates that American investors bought the drop more than global users.
However, in the past days, the metric has experienced a sharp spike, showing that the price listed on Coinbase is higher than Binance today. It appears that US holders have increased their buying today, perhaps because they think the rally is not over yet and see the current decline as a prime buying opportunity.
In the past, there have been several price increases supported by purchases from American investors, so it is possible that Bitcoin may see an increase in the coming days from this very positive premium index.
Another possibility that should not be discounted is that this sharp increase may be a sign that global investors have started to sell more, which, if true, could lead to losses in the asset.
The price of BTC
At the time of writing, Bitcoin is trading around $21,600, down 5% over the past week.
BTC has seen decline during the past few days | Source: BTCUSD on TradingView
Featured images from André François McKenzie on Unsplash.com, charts from TradingView.com, CryptoQuant.com