Bitcoin Coinbase Premium Returns to Positive After 10 Weeks

Bitcoin Coinbase Premium Returns to Positive After 10 Weeks – Is US Demand Coming Back?

Bitcoin’s recent market movements might be hinting at a turn for the better, as an important indicator related to US demand has changed direction. The Coinbase Premium Gap has shifted back to positive territory after nearly 10 weeks of negative readings, a period that corresponds with Bitcoin's decline from about $95,000 to below $65,000 in February.

Key Takeaways

The Coinbase Premium Gap has turned positive after 10 weeks of negative trends, suggesting a potential increase in US demand for Bitcoin.
The gap's movement indicates that US investors may be starting to accumulate Bitcoin again.
Bitcoin could still see further drops, possibly to around $50,000, based on historical price patterns and technical analysis.
Caution is urged as market dynamics remain volatile, and a definitive bottom has not yet been established.

Bitcoin

Coinbase Premium Gap Turns Positive

The Coinbase Premium Gap, which tracks the price difference between Bitcoin on Coinbase— a major exchange for US retail and institutional investors— and offshore platforms like Binance, has remained negative throughout Bitcoin's correction from $95,000 down to the mid-$60,000 range. When this gap is negative, it usually indicates that US traders are selling Bitcoin faster than new buyers are entering the market. Conversely, a positive gap suggests rising demand from US investors, pushing Coinbase prices higher compared to the global market.

This metric stayed in the negative zone from January 1 until March 7, indicating a significant absence of US spot demand among crypto investors during that timeframe. The gap reached its lowest point of -175 on February 2, which aligned with Bitcoin's sharpest price drop. Presently, the Coinbase Premium Gap has risen to a positive reading of +25.4, as reported by CryptoQuant analyst @IT_TECH_PL. This shift from a low of -175 to a positive figure signals the beginning of a meaningful change in market dynamics.

Chart Image From X. Source: @IT_TECH_PL

While this early improvement suggests that American spot demand for Bitcoin may be regaining traction, it's important to note that the overall price movement still allows for potential declines before firmly establishing a bottom.

Bitcoin's Possible Drop to $50,000 Before Finding a Bottom

Despite some on-chain signals indicating improvements, several analysts are exercising caution in declaring that the broader market correction is over. Technical analysis from crypto analyst Ted Pillows points to a long-term indicator that has consistently aligned with Bitcoin's lowest market points.

BTCUSD trading at $71,741. Chart: TradingView

Pillows notes that during the last two major bear markets, Bitcoin fell below the 300-week exponential moving average (300W EMA) and typically dropped over 15% beneath this indicator before reaching its final low.

Currently, Bitcoin's 300-week EMA is around $57,100. Following this pattern could suggest a potential dip to approximately $50,000, representing about a 15% decrease below the indicator. However, it’s crucial to recognize that this projection does not guarantee that Bitcoin will revisit this level before hitting a bottom.

Featured image from Pexels, chart from TradingView