The BTC coinbase premium turns negative which means that the short-term selling pressure on the exchange is mounting so let’s see what this means for bitcoin’s price in our latest BTC news.
Bitcoin’s breakout above $50K could have to wait longer to materialize as spot buying pressure on Coinbase Pro just showed signs of weakening in the short-term. The Coinbase premium index that measures the gap between the BTC price on Coinbase Pro and Binance flipped negative as per the data from CryptoQuant. In other words, the selling pressure on the exchange seems to be strengthening compared with other exchanges like Binance.
Breaking 50k looks pretty tough as Coinbase premium becomes -$45
Chart 👉 https://t.co/gC1Jqrbn9b pic.twitter.com/LyVzZamlta
— Ki Young Ju 주기영 (@ki_young_ju) February 14, 2021
The negative reading on Coinbase Premium Index could be a sign of short-term resistance so when the premium is high it usually shows a strong spot buying pressure on Coinbase. Based on that index, CryptoQuant’s CEO Ki-Young Ju believes that $50K looks pretty tough in the near-term, as he added:
“Current buying power doesn’t come from Coinbase. No more Coinbase premium compared to Binance/Huobi/OKEx. Be careful.”
The BTC coinbase premium turned negative so Coinbase became a major bellwether for BTC demand due to the popularity between institutional buyers. These market participants acquire their BTC via over the counter markets on the exchange so these larger purchases don’t impact the price instantly as they signify the growing demand for the asset and the diminishing supply. The Premium index is one way to gauge institutional demand for the BTC in the short-term.
The short-term fluctuation in the premium doesn’t seem to have any bearing on the BTC long-term trajectory so the asset remains in a strong uptrend and peaked north of $49,700 a day ago. The BTC price gained 28% over the past week because of the planned acquisition by Tesla. Based on the car’s manufacturer’s recent $10K filing with the US Securities and Exchange Commission it plans to allocate about 7.7% of the gross cash position to BTC.
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The fund managers and publicly-traded companies hold about 6% of Bitcoin’s circulating supply which is a figure that doesn’t include Tesla’s $1.5 billion purchase.
As reported earlier, Bitcoin’s price extended its upward move to $49,700 before starting a correction lower against the US dollar. the price also started a sharp downside correction after setting a new ATH of $49,700.
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