Ethereum Rebounds 6%, But Coinbase Demand Remains Weak

Data shows the Ethereum Coinbase Premium Index has stayed inside the negative territory even as the price has climbed back above $2,100.

As pointed out by Arab Chain in a CryptoQuant Quicktake post, the Coinbase Premium Index has been in the red zone for Ethereum recently. This indicator keeps track of the percentage difference between the ETH price listed on Coinbase (USD pair) and that on Binance (USDT pair).

Below is a chart that shows the trend in the Ethereum Coinbase Premium Index over the past month.

As is visible in the graph, the Ethereum Coinbase Premium Index has dropped into the negative region in the last few days, indicating BTC has been trading at a lower rate on Coinbase as compared to Binance. In other words, users of the former have been applying a higher selling pressure than that of the latter.

Initially, the decline in the indicator came as the asset observed a retrace from last week’s highs. The timing would suggest that Coinbase traders led the price drawdown. But interestingly, while the Coinbase Premium Index has remained at a value of -0.0149 during the past day, ETH’s price has actually seen a rebound back above the $2,100 level.

The trend could be a sign that Binance investors have helped provide the fuel for the surge. If the Coinbase Premium Index stays red in the coming days, however, it’s possible that the move could run out of momentum. This is because, in recent times, American institutional entities, which use Coinbase as their preferred platform, have tended to be the drivers in the cryptocurrency sector.

Whenever demand from these investors is lacking, Ethereum and other major tokens like Bitcoin tend to suffer. So far, the rebound hasn’t been able to ignite interest among the US-based whales, so it only remains to be seen whether things will change as the rally unfolds.

The Coinbase Premium Index only tells a short-term story of the market. From a more long-term view, Ethereum’s rebound from $1,800 over the past month occurred after a retest of a significant level in the Market Value to Realized Value (MVRV) Ratio, as analyst Ali Martinez has highlighted in an X post.

The MVRV Ratio basically tells us about the profit-loss situation of the ETH investors as a whole. As shown in the below chart, the Ethereum MVRV Ratio plunged below 1.0 during this year’s drawdown, implying that the overall network entered into a state of loss.

The metric ended up going down to the 0.8 level, which has often acted as a low point for the cryptocurrency in the past. “Historically, this is a ‘Generational Buy’ zone,” noted the analyst. Since this retest, ETH has observed its rebound.

At the time of writing, Ethereum is trading around $2,160, down 7% over the past week.