U.S. Traders Pull Back as Bitcoin Dips Below $90K

Bitcoin continued its drop on Monday, moving closer to the mid-$80K range as the Coinbase Premium Index, a key indicator of demand, turned negative. This shift raises concerns about a potential decline in U.S. demand affecting Bitcoin’s short-term prospects.

Key Takeaways

Bitcoin's price has dropped below $90K, signaling weak demand from U.S. traders.
The Coinbase Premium Index has dipped into negative territory, suggesting that U.S. traders are either stepping back or selling.
Current momentum indicators are bearish, and increased volatility may lead to more significant price movements soon.
Futures trading activity shows signs of traders unwinding positions as market conditions soften.
Bitcoin may test the $82K–$84K liquidity zone if U.S. demand remains low.

U.S. traders pull back as Bitcoin slides below $90K

Understanding the Decline in U.S. Demand for Bitcoin

The Coinbase Premium Index measures Bitcoin prices on Coinbase against those on international exchanges like Binance. When this index is positive, it usually signifies strong purchasing activity from U.S. institutions and affluent traders.

Bitcoin Coinbase Premium Index
Source: Coinglass

However, the index has recently fallen back below zero, indicating that U.S. traders may be pulling back or even selling into the market. Historically, extended periods of a negative premium often coincide with broader declines in price. This is particularly concerning given that Bitcoin's price momentum has already shown signs of weakness.

Bitcoin Price Trends Amid Increased Volatility

Currently, Bitcoin is priced around $86,000, marking a series of lower lows that started in late October. Momentum indicators are bearish, with the daily Relative Strength Index (RSI) nearing oversold conditions and unable to maintain any upward movement.

Bitcoin daily timeframe price trend
Source: TradingView

The Choppiness Index, which assesses volatility, has risen above 60. This level typically indicates that prolonged sideways price action is ending, signaling that a larger price movement is imminent. Given the current downward pressure and diminishing U.S. demand, this upcoming movement may trend downward.

Futures Market Trends Reflect Soften Sentiment

Though open interest across major exchanges remains high, Coinglass data reveals a trend of derisking among traders. Futures positions have been gradually unwinding since late November as Bitcoin has struggled to regain the $92,000 mark. The combination of decreasing open interest, a negative U.S. premium, and falling spot prices suggests that traders are exiting rather than preparing for future gains.

Anticipating Bitcoin's Future Movements

If U.S. demand continues to decline, Bitcoin might revisit the liquidity range between $82K and $84K, an area that has previously acted as both a support level and a focal point for liquidations over the past year. A significant change in the Coinbase Premium Index may indicate a potential resurgence in demand, but for the moment, such interest is lacking.

Conclusion

In summary, the signs indicate that the U.S. trading landscape for Bitcoin is cooling off, potentially leading to a further decline in its price. Monitoring the Coinbase Premium Index will be crucial for understanding any shifts in market sentiment moving forward.