According to a report from CoinDesk, blockchain data analytics firm CryptoQuant’s data shows that Coinbase’s premium index has dropped to rare negative levels. Such deep negatives have historically coincided with local price bottoms, suggesting this may signal Bitcoin nearing its bottom.
David Lawant, research lead at institutional cryptocurrency trading platform FalconX, stated on the X platform:
Source:
David Lawant
The Coinbase premium index measures the difference between Bitcoin prices on Coinbase Pro (widely used by US users and many institutional market participants) and on offshore exchange Binance (leading in trading volume and popular among retail users).
Data indicates that the Coinbase premium index remained predominantly negative for much of June and May, similar to the market downturn in August and September last year. Last Friday, the index slid to nearly -0.19, the lowest intraday reading since the November 2022 FTX exchange closure.
Coinbase Bitcoin Premium Index (Source: CryptoQuant)
This negative level indicates subdued demand from US investors and selling pressure, as Bitcoin prices have consolidated within a range since reaching historical highs in March. Concerns among investors also grow regarding potential outflows from US Bitcoin spot ETFs (many settling via Coinbase) and asset liquidations through Coinbase by the US government, potentially discounting prices on Coinbase.
However, such deep negative Coinbase discounts have previously occurred near local Bitcoin price bottoms, followed by significant rebounds over subsequent months, such as those seen in November 2022 and August 2023. Lawant from FalconX told CoinDesk:
Given several upcoming catalysts centered around the US, such as ETF fund flows, US monetary policy, and the presidential election, Lawant anticipates this trend to persist, stating: