A quant explained what a potential Bitcoin leading indicator might say about the future of the cryptocurrency’s price.
Bitcoin Coinbase Premium may hold the answer to BTC’s next move
In a CryptoQuant Quicktake post, an analyst talked about the trend currently taking place in Bitcoin Coinbase Premium. “We can use the performance of Coinbase Premium as a leading indicator of the future direction of the BTC price,” the quant notes.
“Coinbase Premium” is a metric that tracks the difference between the price of Bitcoin quoted on cryptocurrency exchanges Coinbase (USD pair) and Binance (USDT pair).
When the value of this indicator is positive, it means that the price indicated on Coinbase is higher than that on Binance at this moment. This trend suggests that buying pressure is greater (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 more sales than Binance, as the asset is currently trading at a lower price there.
Now, here is a chart showing the trend of Bitcoin Coinbase Premium’s 30-day moving average (MA) over the last two years:
The metric’s 30-day MA appears to have declined in recent weeks | Source: CryptoQuant
As shown in the chart above, the Bitcoin Coinbase Premium 30-day MA has been positive recently, suggesting that Coinbase users have supported the asset during the rally.
Coinbase is popularly known as the preferred platform of US-based institutional entities, while Binance has a more global user base. Therefore, the value of the reward may provide clues to how the behavior of American whales differs from that of the rest of the world.
From the chart, it is visible that the buying pressure from these institutional traders peaked along with the price high, but has been declining ever since. The parameter continues to be positive overall, although it is now quite close to neutral zero.
In the chart the quant highlighted an interesting pattern that the cryptocurrency has followed compared to Coinbase Premium over the last two years. It would appear that every time the indicator bottomed in negative territory and reversed back into an uptrend, the price of the coin observed a rebound.
An example of this trend also occurred earlier in the year, when an indicator reversal led Bitcoin to observe a rally in which the asset would eventually break its all-time high.
Coinbase Premium is currently experiencing a downtrend, but has not yet fallen into negative territory. The analyst explains that BTC is in a “wait and see” phase, where a rebound may take a while. The parameter must first fall further and reach a turning point, at least if the historical pattern is to repeat itself.
Bitcoin had previously fallen below $61,000, but the asset found a slight rebound in the last day, returning above $62,700.
