Data shows that Bitcoin users on the Coinbase exchange have been selling recently, which is likely the reason behind BTC’s drop below $58,000.
Bitcoin drops below $58,000 in latest drop
Contrary to what investors might have hoped, Bitcoin didn’t appear to be shaking off the downward winds as the currency suffered another setback over the weekend. In this latest drop, Bitcoin hit a low of $57,100, a level not seen since mid-August.
The chart below shows the recent path of the asset.
The price of the coin seems to have been sliding down over the last few days | Source: BTCUSD on TradingView
As for what could be behind this price drop, perhaps an index called the Coinbase Premium Index can tell us at least part of the story.
Coinbase Premium BTC Indicator Turned Red Recently
As one analyst at CryptoQuant Quicktake pointed out, mailThe Coinbase Premium Index has recently reversed direction. The “Coinbase Premium Index” is an index that tracks the percentage difference between the Bitcoin prices listed on Coinbase (USD pair) and Binance (USDT pair).
When this metric is positive, it means that the BTC price listed on Coinbase is higher than its price on Binance at the moment. This trend indicates that users on Coinbase are engaging in a higher volume of buying or a lower volume of selling compared to investors using Binance.
On the other hand, the negative indicator indicates that Coinbase may see higher selling pressure than Binance since the price there is currently lower.
Now, here is a chart showing the trend in the Bitcoin Coinbase Premium Index over the past month or so:
Looks like the value of the metric has been under the zero mark in recent days | Source: CryptoQuant
As shown in the chart above, the Bitcoin Coinbase Premium Index has been in positive territory since the crash below $50k in early August until a few days ago.
This buying push from Coinbase users may have helped the cryptocurrency recover during this period. However, in the past few days, the indicator has flipped into negative territory again and with this shift, the price of the asset has recorded a decline.
Given this trend, it appears that the shift towards selling from buying by investors on Coinbase may have played at least a role in Bitcoin’s recent decline.
The price of BTC appears to be following the Coinbase Premium Index, which is nothing new this year, as the cryptocurrency has been closely interacting with the index’s movements over the past few months.
This may be because Coinbase is the preferred platform for US institutional investors, so when the trend of the indicator changes, it indicates that these large entities have changed their behavior, which is naturally reflected in the value of the coin.
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com