A quant has explained what a potential leading Bitcoin indicator could say about the future of the cryptocurrency's price.
Bitcoin Coinbase Premium May Hold the Answer to Where BTC Comes Next
In a CryptoQuant Quicktake job, an analyst spoke about the trend currently taking place in Bitcoin Coinbase Premium. “We can use the Coinbase Premium trend as a leading indicator of the future direction of the BTC price,” notes the quant.
THE “Coinbase Premium” is a metric that tracks the difference between the price of Bitcoin shown on the cryptocurrency exchanges Coinbase (USD pair) and Binance (USDT pair).
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When the value of this indicator is positive, it means that the price indicated on Coinbase is currently higher than on Binance. Such a trend suggests that buying pressure is higher (or selling pressure is lower) on the first platform than on the second.
On the other hand, the negative premium implies that Coinbase could see higher sales volume than Binance, as the asset is currently trading at a lower price there.
Now here is a chart that shows the 30-day moving average (MA) trend of Coinbase Premium Bitcoin over the last two years:
The 30-day MA value of the metric seems to have been going down in recent weeks | Source: CryptoQuant
As seen in the chart above, the 30-day MA Bitcoin Coinbase Premium has been positive recently, suggesting that Coinbase users have supported the asset throughout the rally.
Coinbase is commonly known as the preferred platform for US-based companies. institutional entities, while Binance has a more global user base. As such, the value of the bounty can provide insights into how the behavior of American whales differs from that of the rest of the world.
The chart shows that buying pressure from these institutional traders peaked alongside the price peak, but has since declined. The measure continues to be generally positive, although it is now quite close to neutral zero.
In the chart, the quant highlighted an interesting pattern that the cryptocurrency has followed regarding Coinbase Premium over the past couple of years. It would seem that every time the indicator bottoms in negative territory and returns to an uptrend, the price of the coin has seen a rebound.
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An example of this trend also occurred just earlier in the year, when a reversal in the indicator led Bitcoin to see a rally in which the asset would eventually break its level. record level.
Coinbase Premium is currently on a downward trend, but it has not yet plunged into negative territory. The analyst explains that BTC is in a “wait and see” phase, where the rebound could take a little longer. The metric must first fall further and reach a reversal point, at least if the historical pattern is to repeat itself.
BTC Price
Bitcoin had fallen below $61,000 earlier, but the asset saw a slight rebound over the past day, returning above $62,700.
Looks like the price of the coin has shot up over the last 24 hours | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, CryptoQuant.com, chart from TradingView.com