Buy Or Sell Bitcoin? Quant Reveals What Leading Metric Says
May 13 2024 - 8:00PM
NEWSBTC
A quant has explained what a potential leading Bitcoin indicator
could say about what’s next for the cryptocurrency’s price. Bitcoin
Coinbase Premium May Hold The Answer To Where BTC Goes Next In a
CryptoQuant Quicktake post, an analyst has talked about the trend
currently taking place in the Bitcoin Coinbase Premium. “We can use
the trend of Coinbase Premium as a leading indicator of the future
direction of BTC price,” notes the quant. The “Coinbase Premium” is
a metric that keeps track of the difference between the Bitcoin
price listed on the cryptocurrency exchanges Coinbase (USD pair)
and Binance (USDT pair). Related Reading: Latest Bitcoin Top Is
Different From 2021 Peak, Analyst Explains Why When the value of
this indicator is positive, it means that the price listed on
Coinbase is higher than on Binance right now. Such a trend suggests
the buying pressure is higher (or the selling pressure is lower) on
the former platform than on the latter. On the other hand, the
negative premium implies Coinbase might be observing a higher
amount of selling than Binance, as the asset is currently trading
at a lower price there. Now, here is a chart that shows the trend
in the 30-day moving average (MA) of the Bitcoin Coinbase Premium
over the last couple of years: The 30-day MA value of the metric
seems to have been going down in recent weeks | Source: CryptoQuant
As displayed in the above graph, the 30-day MA Bitcoin Coinbase
Premium has been positive recently, suggesting that Coinbase users
have supported the asset through the rally. Coinbase is popularly
known as the preferred platform of the US-based institutional
entities, while Binance has a more global user base. As such, the
premium’s value can provide hints about how the behavior of the
American whales differs from that of the rest of the world. From
the chart, it’s visible that the buying pressure from these
institutional traders peaked alongside the price top but has since
been declining. The metric continues to be positive overall,
although it’s now quite close to the neutral zero mark. In the
graph, the quant has highlighted an interesting pattern that the
cryptocurrency has followed regarding the Coinbase Premium during
the last two years. It would appear that whenever the indicator has
hit bottom in negative territory and reversed back to an uptrend,
the coin’s price has observed a rebound. Related Reading: Arbitrum
Prints TD Buy Signal: Trend About To Flip? An example of this trend
also played out just earlier in the year, when a reversal in the
indicator led to Bitcoin observing a rally in which the asset would
eventually break its all-time high. The Coinbase Premium is
currently riding a downtrend, but it’s yet to dip into negative
territory. The analyst explains that BTC is in a “wait and see”
phase, where a rebound might be a bit longer out. The metric has to
first decline more and reach a reversal point, at least if the
historical pattern has to repeat. BTC Price Bitcoin had slipped
under $61,000 earlier, but the asset has found a slight rebound in
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
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