Data shows the Bitcoin Coinbase Premium Index has turned positive again, a sign that demand for buying BTC is back from the American investors.
Bitcoin Makes Recovery As Coinbase Premium Index Turns Green
As pointed out by an analyst in a CryptoQuant Quicktake post, the Bitcoin Coinbase Premium Index has surged into the positive territory recently after having been negative during the crash.
Related Reading: CryptoQuant’s Bitcoin Cycle Indicator Says BTC Now In Bear Phase
The “Coinbase Premium Index” here refers to an indicator that keeps track of the percentage difference between the Bitcoin prices listed on 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 greater than on Binance right now. Such a trend implies BTC is observing a higher buying pressure or a lower selling pressure on the former as compared to the latter.
On the other hand, the indicator being below zero suggests users on the Coinbase platform may be participating in a higher amount of selling than those on Binance.
Now, here is a chart that shows the trend in 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 displayed in the above graph, the Bitcoin Coinbase Premium Index had turned negative towards the end of July, which is when BTC’s drawdown had first started. The indicator had then kept up its decline to achieve notable red values, which had led into the cryptocurrency’s recent crash.
The timing of this trend could suggest that the Coinbase users had some role to play in the bearish price action. From the chart, it’s visible that once the asset had plunged to its lows, the indicator had flipped to positive instead, meaning that a wave of buying had appeared on the platform.
Since then, the Coinbase Premium Index has continued to be inside the green region and the coin’s price has made some recovery. Once more, it seems the Coinbase users had a part in the asset’s trajectory.
Related Reading: Bitcoin HODLers Still Selling At Profit Amid Short-Term Holder Capitulation
This pattern is actually not anything new, as the cryptocurrency has in fact been showing a relationship with the Coinbase Premium Index for most of the time this year.
Coinbase is known to be the preferred platform of the American institutional entities, while Binance hosts a global traffic, so the indicator can be considered to reflect how the behavior of the US-based whales differs from the rest.
Thus, when its value changes polarity, it may be assumed that these large investors are switching their strategy. The metric is currently green, but it remains to be seen if the same would 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 seen a setback yesterday as its price had slipped under $55,000, but the coin has already recovered as it’s now back 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 from Dall-E, CryptoQuant.com, chart from TradingView.com