- The Bitcoin Coinbase Premium Gap turned negative on January 11.
- There could be continued selling pressure from US participants in the coming week.
Bitcoin [BTC] on January 10, eleven spot ETF applications were approved, and trading began the next day. Some investors expected prices to move higher, while others claimed the event was already priced in.
The latter turned out to be correct, at least in the short term. BTC prices rose to $48.9k on Binance on January 11, but fell to $41.5k a day later.
Ki Young Juthe founder and CEO of CryptoQuant, posted on X (formerly Twitter) that Grayscale has sent 21.4k BTC to multiple addresses in the last 30 days.
The implications were not that these outflows were the sole cause of the price decline. However, it did play a role.
Exploring the Coinbase Premium Gap
Maarten also went to X to investigate the implications of this BTC outflow. He noted that after spot ETF trading began, the Coinbase Premium Gap started to turn negative.
This premium is the price difference between Coinbase’s BTC/USD pair and Binance’s BTC/USDT pair. Higher values mean that US investors are eager to buy BTC, while negative values imply that US participants are selling their BTC.
Source: CryptoQuant
The premium was positive for most of December and January, indicating strong demand. Particularly in January, Bitcoin crossed the high of $44.3k twice, but both times prices fell back into the range.
Maarten further noted that trading volume on Coinbase was high during US trading hours. In addition to the falling premium, he suggested that this could be a bad sign for Bitcoin bulls on the next trading day – January 16.
Will prices drop further next week?
AMBCrypto analyzed Bitcoin’s liquidation heatmap to understand where prices might go. Since liquidity is one of the main driving forces in the market, high liquidity positions can help spot trends that could reverse.
Source: Hyblok
The $48k-$48.2k liquidity pool has been tested and BTC suffered a sharp reversal near $49k on January 11. To the north, the $50.2k, $51.2k and $52.4k levels were notable areas of interest.
Lower on the chart, the $39.2k-$40k region has a much denser concentration of large liquidation levels.
Read Bitcoin’s [BTC] Price forecast 2024-25
Further out, the $35,000 and $33.8,000 levels are estimated to see further liquidation levels. Therefore, a reversal to these levels in the coming weeks or months would most likely mean a bottoming out in the local market.
As things stand now, it is more likely that BTC will fall in search of liquidity than it will rise past $50,000.