Coinbase premium tumbles to its lowest point in the past twelve months
The cryptocurrency market is experiencing a lull, with Bitcoin's price hovering near $96,760 as of writing. This comes after a significant drop, with the Coinbase Premium, an indicator of institutional demand, reaching a 12-month low of -0.237 by early 2025.
According to an analysis by CryptoQuant analyst Burak Keshmechi, the decrease in the Coinbase Premium is primarily due to increased selling pressure by U.S.-based institutional investors on Coinbase compared to traders on Binance. This shift from a positive premium (indicating strong US buying) to a negative premium reflects that large U.S. whales moved from aggressive buying to profit-taking or risk-off positioning, contributing to Bitcoin's price retracement below $120,000.
The negative Coinbase Premium suggests that U.S. institutions are currently net sellers, applying downward pressure on Bitcoin's price in the short term. Since the premium gap has historically been a reliable short-term indicator of institutional sentiment, the negative reading implies a cautious or risk-off stance among key market participants, potentially delaying or moderating near-term price recovery.
However, earlier periods of premium resurgence corresponded with institutional dip-buying that preceded price surges. Any renewed positive shift in the Coinbase Premium could quickly reignite short-term bullish momentum.
The drop in the Coinbase Premium also coincided with rising uncertainty ahead of the U.S. presidential election and low market liquidity, contributing to the growing selling pressure. The decline is attributed to the recent correction in Bitcoin's price to $91,500.
Despite the current market conditions, Bitcoin's price has shown a 3.5% increase over the last 24 hours, offering a glimmer of hope for short-term recovery. The key to a sustained uptrend lies in the return of institutional buyers and a shift in the Coinbase Premium back into positive territory.
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Investing in Bitcoin's finance sector seems to face challenges as U.S.-based institutional investors are contributing to the downward pressure on its price, indicated by the negative Coinbase Premium. This shift in the technology sector, from aggressive buying to profit-taking or risk-off positioning, foreshadows potential delays in Bitcoin's near-term price recovery. However, a renewed positive shift in the Coinbase Premium could spark a quick revival in the short-term bullish momentum for Bitcoin's investing market.
