As a seasoned crypto investor with a knack for deciphering market trends and a keen eye for on-chain data, I find the recent Bitcoin rally intriguing. The negative Coinbase Premium Gap, as highlighted by the analyst’s findings, suggests that global investors, particularly those using Binance, are driving this surge.
According to recent on-chain analysis, there are several possible candidates fueling the Bitcoin resurgence that pushed its price above $68,000 once more.
Bitcoin Coinbase Premium Gap Has Remained Negative Recently
According to an analyst’s post in a CryptoQuant Quicktake, the gap between Bitcoin’s price on Coinbase versus Binance has been shrinking as Bitcoin’s price increases. This “Coinbase Premium Gap” is essentially a tool that monitors the variation between Bitcoin’s prices listed on Coinbase (against USD) and Binance (versus USDT).
When the figure for this metric is more than zero, it indicates that the cost of the asset is at present greater on Coinbase compared to Binance. This pattern implies that there’s stronger demand (buying pressure) or less supply (selling pressure) in the former market as opposed to the latter one.
Conversely, if the indicator is showing negative values, it suggests that Coinbase users might be engaged in more selling activities compared to Binance users because Bitcoin is being traded at a lower price on Coinbase.
Presently, let me share with you a graph illustrating the recent changes in the Bitcoin Coinbase Spread over the past few days:
In my analysis, as shown in the provided graph, the Bitcoin Coinbase Premium Gap has been showing negative values lately, signifying that Binance users have been eager to purchase the asset at a higher price than Coinbase customers. Interestingly, this gap dipped as low as approximately -106 earlier today, indicating that for a brief period, Bitcoin was being traded at an elevated cost of $106 on Binance. It’s clear from the graph that this surge in buying activity on the exchange has aligned with the commencement of Bitcoin’s latest upward trend.
Binance is globally utilized by various investors, whereas Coinbase primarily serves U.S. investors, particularly large institutions. Consequently, the Coinbase Premium Gap might indicate differences in investment behavior between American ‘whales’ and international investors.
Throughout most of 2024, Bitcoin’s price movement appears to be closely tied to this specific indicator, implying that US-based institutional investors have played a significant role in shaping the market. However, recent trends indicate a departure from this norm, as it appears the surge in buying activity from Binance users is fueling the current upward trend instead.
According to the analyst’s observations, the increase in Bitcoin spot ETFs demand from American entities over the last fortnight is substantial, amounting to around 47,000 Bitcoins. This rise doesn’t suggest a decrease in their overall demand for Bitcoin.
A large portion of Exchange-Traded Funds (ETFs) dealing with cryptocurrencies rely on Coinbase for safekeeping. Consequently, fluctuations in these funds can influence the Coinbase Premium Gap. However, despite recent inflows, the Coinbase Premium Gap has persisted in being negative, suggesting that the demand from Binance’s major investors (whales) has been greater than the interest from U.S. investors.
BTC Price
At the time of writing, Bitcoin is trading around $68,700, up 2% during the last 24 hours.
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2024-10-29 01:41