The value of BTC might remain in a phase of consolidation longer than first expected, as the latest on-chain data reveals that the Bitcoin Coinbase Premium Index has fallen back below zero. What does this declining metric indicate for the leading cryptocurrency?
Is The Bitcoin Value Facing A Potential Decline?
In a recent update on the X platform, renowned crypto analyst Ali Martinez disclosed that the Bitcoin Coinbase Premium Index has been reducing, dipping below a vital level in recent days. The Coinbase Premium Index serves as an on-chain measure that monitors the variance between the BTC price on Coinbase (USD pair) and Binance (USDT pair).
This measure can also offer insights into the disparities in the purchasing and selling patterns of participants on the two cryptocurrency trading platforms. The Bitcoin Coinbase Premium Index mirrors the sentiment of US institutional players (the primary participants on Coinbase) and how it diverges from those on international exchanges.
Generally, when the Bitcoin price premium on Coinbase elevates or is a positive figure, it suggests a growing demand from US investors, who are prepared to pay more than other global investors for the flagship cryptocurrency. Conversely, the Coinbase Premium Index descending below the zero threshold indicates that US investors are purchasing less in comparison to global traders.
Source: Ali_charts/X
This reduced purchasing activity is underscored by the lackluster performance of spot BTC exchange-traded funds in recent weeks. The most recent market statistics suggest that the US Bitcoin ETF market experienced total outflows of $559 million over the past week.
With institutional and significant US investors not acquiring Bitcoin at current values, the market leader may face challenges in establishing any substantial bullish momentum. Historically, a prolonged drop in the Coinbase Premium Index metric has been linked to a phase of consolidation or even prospective downside risk for the BTC price in the near future.
BTC Whales Liquidate Holdings
In another update on X, Martinez noted that a category of Bitcoin investors has been reducing their positions in recent weeks. Santiment data illustrates that whales holding between 10,000 and 100,000 coins have disposed of 30,000 BTC (valued at approximately $2.9 billion) in the past 10 days.
This degree of selling activity partially elucidates the sluggish price movements of Bitcoin in recent weeks. As of this writing, the price of BTC is just above the $96,500 threshold, representing a 0.8% rise in the past 24 hours. The leading cryptocurrency has decreased by 1.1% over the last week, based on data from CoinGecko.
The value of BTC on the daily timescale | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView
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