Coinbase Premium Turns Positive Since Mid-January As Bitcoin Sees Price Relief

Amid a recent Bitcoin price rebound, Coinbase Premium data shows that American investors are renewing their bullish interest. Notably, the latest price relief only closes a negatively volatile trading week in which Bitcoin experienced a free price fall, as 30% loss pushed prices to around $60,000.  This market plunge by the premier cryptocurrency has been attributed to many factors, including collapsing leverages, high levels of ETF outflows, metals market volatility, and also investors’ expectations in line with the typical boom and bust market cycle.

The Coinbase Premium, one of the most important Bitcoin market indicators, shows the price difference between Bitcoin on Coinbase and its price on other major exchanges. It is largely used to measure how much more or less US investors are paying to acquire Bitcoin compared to international traders.

According to Julio Moreno, Head of Research at CryptoQuant, the Coinbase premium has maintained a negative value since mid-January, suggesting that US traders valued the asset lower compared to their global counterparts, leading to a weak market demand.

However, since Bitcoin bounced off the $60,000 support following the recent bloodbath, the American market participants have rediscovered their market confidence as indicated by a rising demand and corresponding movement of the Coinbase Premium into a positive zone. 

During this time, the flagship cryptocurrency has shown moderate resilience, climbing by over 16% to presently trade around $70,000. However, it is worth noting that the positive Coinbase Premium reading does not singularly confirm an impending full-scale recovery. 

Other factors need to be considered, including macroeconomic developments such as Federal Reserve interest rate decisions and liquidity tightening policies, overall global market sentiment, and geopolitical stability.

At the time of writing, Bitcoin is trading at $68,892, representing a 6.44% gain in the past day. However, significant losses of 17.34% and 23.38% on the weekly and monthly charts, respectively, show the asset is still deep in bearish territory. 

According to a recent post from CryptoQuant, Bitcoin has been about 50% away from its all-time high (ATH). Notably, recent bear markets recorded price slumps as low as 70%-80% indicating, indicating that there is a high possibility of a deeper price correction.

However, CryptoQuant analysts warn that the bigger concern is time capitulation, i.e., how long this market winter will stay compared to how low prices may fall. With a market cap of $1.4 trillion, Bitcoin continues to account for over 55% of the total crypto market cap and is the largest digital asset in the world.