Bitcoin (BTC)’s definitive breakthrough of more than $ 50,000 may have to wait longer to materialize, as the pressure on Coinbase Pro shows signs of weakening in the short term.
The Coinbase Premium Index, which measures the gap between the BTC price on Coinbase Pro and Binance, has fluctuated negatively, according to CryptoQuant. In other words, selling pressure on Coinbase seems to be strengthening compared to other exchanges like Binance.
A negative reading on the Coinbase Premium Index could be a precursor to short-term resistance. On the other hand, if the premium is high, it indicates a strong pressure on buying on Coinbase.
Based on the index, CryptoQuant CEO Ki Young Ju believe a peak of $ 50,000 “looks pretty difficult” in the short term.
Breaking 50k seems pretty difficult as Coinbase premium becomes $ 45
Chart https://t.co/gC1Jqrbn9b pic.twitter.com/LyVzZamlta
– Ki Young Ju 주기영 (@ki_young_ju) 14 February 2021
“The current purchasing power does not come from Coinbase,” he said. added. ‘No more Coinbase premium compared to Binance / Huobi / OKEx. Be careful.”
Coinbase has become an important player in the demand for Bitcoin due to its popularity among large institutional buyers. These market participants obtain their BTC via out-of-bank markets on Coinbase Pro. Although these large purchases do not immediately affect the BTC price, they indicate a growing demand for the digital asset, and in turn reduce the supply. The Coinbase Premium Index is therefore one way to gauge institutional demand for BTC in the short term.
It seems that a short-term fluctuation in the Coinbase premium has no effect on Bitcoin’s long-term trajectory. The digital asset is still strong, reaching a high of $ 49,700 on Sunday, according to TradingView data.
The Bitcoin price has risen by an almighty 28% over the past week, thanks to Tesla’s planned acquisition of the asset. Based on the most recent 10K filing from the electric vehicle manufacturer at the U.S. Securities and Exchange Commission, it plans to allocate approximately 7.7% of its gross cash position to Bitcoin.
Trading companies and fund managers own about 6% of Bitcoin’s circulating offering – a figure that does not include Tesla’s $ 1.5 billion position.