Bitcoin
Bitcoin Could Bottom, According to Coinbase Premium Index Discount
Bitcoin Could Bottom, According to Coinbase Premium Index Discount
Bitcoin (BTC) is currently trading at a discount on Coinbase, a trend that some experts believe could indicate a price bottom for the largest cryptocurrency. According to a post on X, David Lawant, head of research at FalconX, noted that the last time the “Coinbase Premium Index” was this negative, it preceded a significant rally from October 2023 to March 2024.
The Coinbase Premium Index measures the price difference between Bitcoin’s Coinbase, a platform heavily used by U.S. users and institutional investors, and Binance, the leading exchange by trading volume favored by retail users. For most of May and June, the index was negative. On Friday, the index fell to nearly -0.19, its lowest point since the collapse of cryptocurrency exchange FTX in November 2022.
Negative readings on this index suggest weak demand and selling pressure from U.S. investors. Bitcoin has been trading within a tight range since hitting all-time highs in March. Investor concerns have been fueled by outflows from U.S.-listed spot BTC exchange-traded funds (ETFs) and the sale of U.S. government-seized assets through Coinbase.
Historically, deeply negative Coinbase Premium readings often precede local price bottoms and subsequent significant rallies. The index’s low in August 2023 occurred just before Bitcoin bottomed around $25,000. The cryptocurrency then traded in a range until October, when it nearly doubled in price in January, driven by anticipation for upcoming US Bitcoin ETFs. More recently, the Coinbase Premium Index fell to -0.17 during the market capitulation on May 1, when Bitcoin fell to $56,000. BTC subsequently rallied around 27% to $72,000 in June before suffering a decline.