Bitcoin Erases $49,000 ETF Rally As Coinbase Users Take To Selling

Bitcoin had earlier shown a sharp rally toward the $49,000 mark, but the asset was quick to retrace the entire surge as the Coinbase Premium turned negative.

As pointed out by CryptoQuant Netherlands community manager Maartunn in a post on X, the Coinbase Premium Gap has now turned notably negative after being mostly positive for the last few days.

The “Coinbase Premium Gap” refers to the difference between the Bitcoin prices listed on the cryptocurrency exchanges Coinbase (USD pair) and Binance (USDT pair).

This indicator’s value basically provides hints about how the buying or selling behaviors on these two largest platforms in the sector differ from each other right now.

When the metric has a positive value, it means that the price listed on Coinbase is higher than on Binance currently. Such a trend implies the former platform’s users are participating in a higher amount of buying (or lower amount of selling) than the Binance users.

On the other hand, the indicator being positive suggests that Binance might be observing a higher degree of buying pressure at the moment as the price listed on the exchange is greater.

Now, here is a chart that shows the trend in the Bitcoin Coinbase Premium Gap since the start of the year:

As displayed in the above graph, the Bitcoin Coinbase Premium Gap has observed a sharp plunge down into the negative territory during the past day or so. Before this plummet, the indicator had been mostly at positive values since the start of the year.

There were a few dips into the red zone earlier as well, but the indicator only attained minor negative values during these drops. This time, though, the premium is down to significantly negative levels.

The price surges this year were being driven by the buyers on Coinbase, as the price rose every time the premium did as well. Coinbase is popularly known to be used by US institutional investors, so the green premium suggested that these large entities were buying, most likely in anticipation of the ETFs, which finally gained approval on January 10th.

A while after this approval, BTC went on to sharply rally toward the $49,000 level, but the asset’s run was very short-lived as its price plummeted hard back towards the price prior to the move, thus erasing all the gains.

The Coinbase Premium Gap had been notably positive alongside the surge, but the indicator then showed its plunge into the negative territory alongside this quick retrace. It would appear that some American institutional traders may have used the opportunity to harvest their profits.

Bitcoin has been moving sideways since the quick rally and drawdown, as its price is still floating around the $45,800 level.