• The “Coinbase premium index” is an indicator that measures the difference between the Bitcoin price listed on Coinbase Pro (USD pair) and that listed on Binance (USDT pair).
• When the index has a positive value, it means US investors are buying more heavily than global investors.
• The 30-day SMA of the metric has shot up in the past day, suggesting that American investors are buying the dip to a larger degree than before.
What is Coinbase Premium Index?
The “Coinbase premium index” is an indicator that measures the difference between the Bitcoin price listed on Coinbase Pro (USD pair) and that listed on Binance (USDT pair). It provides hints about how current buying behavior of American investors differs from that of Binance’s userbase which is more global-oriented. When the index has a value greater than zero, it means the price listed on Coinbase is higher than that on Binance right now.
What Does Positive Value Imply?
A positive value implies that US investors are putting more buying pressure on the market than global investors currently as they are willing to pay higher. On the other hand, if it has a negative value then it suggests American investors are selling more or just buying to a lesser degree when compared to global holders.
Recent Trend in 30-Day SMA
The 30-day simple moving average (SMA) Bitcoin Coinbase premium had plunged into negative values when the price of cryptocurrency reached below $22,000 few days back. This indicates US investors took part in a bit higher degree of selling around this drawdown. In days after plummeting prices, however, SMA maintained itself around slightly positive values showing American buyers were making purchases at greater extent than global buyers. But recently there was a sharp spike in this metric suggesting Coinbase prices were significantly higher than those at Binance.
Volatility May Increase for Bitcoin
The rapid surge in Bitcoin’s Coinbase premium index could potentially mean increased volatility for bitcoin in near future according to analyst from CryptoQuant post. Since Coinbase is popular exchange used by US based investor especially large institutions this rise could signify rising demand from Americans as they are ready to pay higher amount for Bitcoins when compared to rest of world users who make trades at lower rates through Binance USDT pairs.
Conclusion
This article discussed how recent trend in Bitcoin’s 30-day SMA Coinbase premium index may indicate potential increase in volatility for coin’s market movement due to rising demand from American investor community who seem willing to buy coins at higher prices even as markets remain bearish globally.