Bitcoin’s recent foray into the $70,000 price area has once again become a hot topic among investors, with many looking at a positive price outlook. As a result of this fascinating price action, the vast majority of long term holders have seen their belongings cross into the profit zone. The outlook appears to be positive, especially among American investors, as evidenced by the Coinbase premium turning positive. Some see the return of the Coinbase premium as a bullish signal that could continue to push the price higher.
Coinbase Premium Index is turning positive
The Coinbase Premium Index (CPI), which had been trading negative since May 18, has now turned positive, according to a cryptocurrency analyst which cited data from CryptoQuant. The Coinbase Premium refers to the difference in the price of Bitcoin on Coinbase compared to other major exchanges.
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When the premium turns positive, it means Bitcoin is trading at a higher price on Coinbase compared to Binance and subsequently other major crypto exchanges. This is important because it shows increased demand for Bitcoin on one of the largest US-based crypto exchanges. On the other hand, a negative premium indicates a lack of substantial buying pressure from US-based traders.
Since Coinbase is a popular entry point for new US crypto investors, a premium price indicates money is flowing into Bitcoin. At the time of writing, data from CryptoQuant shows that this premium recently reached 13.11. While this may seem small, it certainly signals the beginning of buying pressure that could send Bitcoin another step higher
Interestingly, this shift to a positive Coinbase premium has been accompanied by a less optimistic view of Bitcoin among Korean and Asian investors, at least in the short term. This information is revealed by CryptoQuant’s Korea Premium Indexwhich has been on a downward trend over the past two weeks.
Bitcoin remains strong
At the time of writing, Bitcoin is trading at $71,095 and is up 4.31% amid increased buying momentum. Bitcoin open interest recently reached its all-time high. While a positive Coinbase Premium is a bullish indicator, the context surrounding why this is happening is very important in determining where Bitcoin’s price will go.
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Much of the positive premium can be attributed to individual large holders, called whales, as on-chain data shows copies of massive Bitcoin transfers from Coinbase to unknown private wallets.
As mentioned earlier, a continued positive premium and interest from institutions and retail buyers is the most promising scenario for Bitcoin to build on. However, Coinbase whales’ interest alone may not be enough to drive a long-term, substantial price increase. For Bitcoin to continue its upward trajectory, there must be a corresponding increase in price interest from private investors.
Featured image created with Dall.E, chart from Tradingview.com