A final Bitcoin (BTC) breach above $ 50,000 may have to wait longer for immediate buying pressure on Coinbase Pro to show signs of weakness – at least, in the short term.
The Coinbase Premium Index, which measures the gap between the price of BTC on Coinbase Pro and Binance, has turned negative, according to CryptoQuant. In other words, the selling pressure on Coinbase appears to be getting stronger compared to other exchanges such as Binance.
Coinbase Premium’s negative reading could be a precursor to short-term resistance. On the other hand, when the premium is high, it indicates strong buying pressure on Coinbase.
Based on the index, CryptoQuant CEO Ki Young Ju Believes Exceeding $ 50,000 “looks very difficult” in the near term.
Breaking 50k seems pretty difficult as Coinbase’s premium – $ 45
Diagram https://t.co/gC1Jqrbn9b pic.twitter.com/LyVzZamlta
– Ki Young Jo (ki_young_ju) February 14, 2021
“The current purchasing power is not coming from Coinbase,” he said Added. “No more Coinbase premium compared to Binance / Huobi / OKEx. Be careful.”
Coinbase has become a major pioneer of Bitcoin demand due to its popularity among large institutional buyers. These market participants obtain their bitcoins through OTC markets on Coinbase Pro. Although these large purchases do not affect the Bitcoin price immediately, they are indicative of an increased demand for the digital asset, and thus a diminishing supply. Hence, Coinbase Premium Index is one way to measure institutional demand for BTC in the short term.
The short-term fluctuations in Coinbase’s premiums don’t appear to have any bearing on Bitcoin’s long-term path. The digital asset remains in a strong bullish trend, after peaking north at $ 49,700 on Sunday, according to TradingView data.
Bitcoin has risen 28% over the past week, thanks in large part to Tesla’s planned acquisition of the asset. Based on the U.S. Securities and Exchange Commission’s latest 10K file for the electric car maker, it plans to allocate roughly 7.7% of its total monetary position to Bitcoin.
Publicly traded companies and fund managers own roughly 6% of Bitcoin’s traded supply – a figure that does not include Tesla’s $ 1.5 billion position.