According to a report by CoinDesk, blockchain data analytics firm CryptoQuant’s data shows that Coinbase’s premium index has dropped to unusually negative levels. Such deep negatives have often appeared near local price bottoms in the past, suggesting it could be a signal that Bitcoin is nearing its bottom.
David Lawant, research head at institutional cryptocurrency trading platform FalconX, stated on the 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 the offshore exchange Binance (a leading volume and retail user-friendly exchange).
Data indicates that the Coinbase premium index has been largely negative throughout June and May, similar to the market downturn in August and September last year. Last Friday, the index slipped to nearly -0.19, the lowest reading within daily timeframes since the November 2022 closure of the FTX exchange.
Coinbase Bitcoin Premium Index (Source: CryptoQuant)
This negative level suggests weak demand from US investors and selling pressure, as Bitcoin prices have been consolidating within a range since hitting historic highs in March. Investors are also increasingly concerned about outflows from US Bitcoin spot ETFs (many of which settle through Coinbase) and potential asset sales by the US government through Coinbase, which could lead to discounts on Coinbase.
However, such deep Coinbase discounts have previously appeared near local Bitcoin price bottoms, followed by significant rebounds over the subsequent months, such as 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 presidential elections, Lawant expects this trend to continue, saying:
