Bitcoin’s Coinbase premium turned negative. Here’s what it means for BTC price

The final Bitcoin (BTC) breakout above $ 50,000 may have to wait longer to happen as buying pressures on Coinbase Pro are showing signs of weakening – at least in the short term.

The Coinbase Premium Index, which measures the gap between the BTC price for Coinbase Pro and Binance, has gone negative, according to CryptoQuant. In other words, the selling pressure on Coinbase seems to be increasing compared to other exchanges like Binance.

A negative reading in the Coinbase Premium Index could be a precursor to short-term resistance. If, on the other hand, the premium is high, this indicates strong buying pressure on Coinbase.

Based on the index, CryptoQuant CEO Ki Young Ju believes that reaching $ 50,000 in the short term is “quite difficult”.

Breaking 50,000 looks pretty tough as the Coinbase premium becomes $ 45

Diagram https://t.co/gC1Jqrbn9b pic.twitter.com/LyVzZamlta

– Ki Young Ju @ (@ki_young_ju) February 14, 2021

“The current purchasing power is not coming from Coinbase,” he added. “No more Coinbase bonus compared to Binance / Huobi / OKEx. Danger.”

Coinbase has become a major contributor to Bitcoin demand due to its popularity with large institutional buyers. These market participants purchase their BTC through over-the-counter markets on Coinbase Pro. While these large purchases do not have a direct impact on the BTC price, they do mean growing demand for digital assets, and thus decreasing supply. The Coinbase Premium Index is therefore a way to measure institutional demand for BTC in the short term.

A short-term fluctuation in the Coinbase premium does not seem to have any impact on the long-term development of Bitcoin. According to TradingView data, the digital asset is still in a strong uptrend after peaking north of $ 49,700 on Sunday.

Bitcoin price has soared a whopping 28% over the past week, thanks in large part to Tesla’s proposed acquisition of the asset. Based on the electric vehicle maker’s most recent 10K filing with the U.S. Securities and Exchange Commission, it plans to allocate around 7.7% of its gross cash position to Bitcoin.

Listed companies and fund managers hold around 6% of Bitcoin’s circulating supply – a number that doesn’t include Tesla’s $ 1.5 billion position.

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