While Bitcoin (BTC) has previously shown significant momentum this market cycle, recent insights suggest that liquidity sources outside of Coinbase may be driving the trend.
CryptoQuant analyst, Mignolet, provided details specifically analysis for the Bitcoin market, highlighting the role of major exchanges like Coinbase and Binance in the ongoing bull cycle.
Changing liquidity dynamics and stock market roles
In a recent post on CryptoQuant QuickTake titled “Coinbase Dominance Remains Low,” Mignolet examined the trajectory of Coinbase’s impact on Bitcoin’s price movements.
The analyst highlighted that while Coinbase played a crucial role in the early stages of Bitcoin’s rally this year, its dominance has waned since then. This shift indicates a broader distribution of liquidity across the market, with Binance emerging as an important player in maintaining bullish momentum.
Coinbase dominance remains low
“However, prior to the surge in September and October, Coinbase’s dominance had actually declined and has not increased significantly yet (red box).” – By @mignoletkr
More details https://t.co/nmnPGuz3WK pic.twitter.com/mBSImH8MwD
— CryptoQuant.com (@cryptoquant_com) December 11, 2024
Mignolet’s analysis makes an important observation: Coinbase’s dominance in spot trading has declined significantly during the second phase of Bitcoin’s current rally.
His analysis revealed that Bitcoin exchange-traded funds (ETFs) were approved earlier this year, leading to increased trading activity at Coinbase.
This influx of liquidity was instrumental in pushing Bitcoin prices higher and disrupting traditional halving cycle expectations. However, as the rally progressed, Coinbase’s influence diminished.
The analyst emphasized that while Coinbase remains a pivotal source of liquidity, Binance has taken on a more prominent role in the current market phase. Mignolet wrote:
Let me reiterate: I am not saying that Coinbase liquidity is unimportant or unimportant. It’s very important. What I’m highlighting is that there is a more important source of liquidity. = Binance
Notably, Binance’s increasing dominance indicates that liquidity is flowing from a wide range of participants, contributing to a fairly robust and decentralized market structure.
This redistribution could indicate broader institutional and retail interest in Bitcoin as traders and investors diversify their platforms.
Bitcoin is experiencing a sharp recovery
After a few days of correction that dropped below the $95,000 price level, Bitcoin has now seen a surprising rebound.
In particular, at the time of writing, the asset has reclaimed the $100,000 price tag at a current trading price of $100,625, representing a 4% increase in its price.
This increase in Bitcoin price has now seen the asset fall just 3.6% away from its all-time high above $103,000 that was recorded earlier this month.
Featured image created with DALL-E, chart from TradingView