It may be a while before bitcoin (BTC) finally breaks through the $50,000 mark, as pressure on Coinbase Pro cash buyers seems to be easing, at least in the short term.
The Coinbase Premium Index, which measures the difference between the price of BTC on Coinbase Pro and Binance, has turned negative, according to CryptoQuant. In other words, the pressure to sell the monetary base seems to be increasing compared to other exchanges like Binance.
A negative value for the Coinbase Premium Index could indicate short-term resistance. On the other hand, if the premium is high, it indicates strong buying pressure on Coinbase.
Based on this index, CryptoQuant CEO Ki Yong Ju thinks that it will be quite difficult to go above $50,000 in the near future.
The $50,000 gap seems difficult to close if the premium for the base currency becomes -$45.
Graphic https://t.co/gC1Jqrbn9b pic.twitter.com/LyVzZamlta
– Ki Young Ju 주기영 (@ki_young_ju) February 14, 2021.
The current buying power is not coming from Coinbase, he added. No more Coinbase markup compared to Binance/Huobi/OKEx. Be careful.
Coinbase has become a major buyer of bitcoin demand due to its popularity with large institutional buyers. These market participants buy their BTC on the Coinbase Pro OTC markets. While these large purchases have no immediate impact on the price of BTC, they do indicate an increase in demand for digital assets and, in turn, a decrease in supply. Thus, a Coinbase premium index is a way to assess short-term institutional demand for BTC.
Short-term fluctuations in Coinbase’s premium do not affect bitcoin’s long-term performance. The digital asset remains in a strong uptrend, reaching a high of $49,700 on Sunday, according to TradingView.
The price of bitcoin rose 28% last week, largely due to the proposed acquisition of Tesla. According to the electric carmaker’s latest 10K filing with the SEC, it plans to invest about 7.7% of its gross money in bitcoin.
Listed companies and fund managers account for about 6% of the outstanding bitcoin supply – a figure that does not include Tesla’s $1.5 billion position.
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