Bitcoin's Coinbase Premium Index Hits Two-Year Low

The price differential between Bitcoin on Coinbase (NASDAQ:COIN) and other exchanges is measured by the Coinbase Premium Index, which recently fell to -0.2%, its lowest level in two years. This decline suggests a decrease in institutional interest in the U.S.-based trading platform Coinbase.

It is commonly assumed that U.S. buyers are selling more frequently than their international counterparts, indicating lower institutional demand in the United States. Historically, a positive Coinbase Premium signifies considerable institutional buying power, which typically boosts Bitcoin's price. Conversely, a persistent negative premium could foreshadow price volatility or a downturn.

The current low premium may signal a stall in Bitcoin’s upward momentum, particularly since it has regained strength in recent months. $65,500 serves as a crucial support level, with Bitcoin trading near this threshold.

If selling pressure rises and Bitcoin drops below this critical point, it may test the $63,000 range, another important support level based on recent trading activity. Conversely, Bitcoin could target $72,000, regarded by many analysts as the next significant resistance level, provided the buyers regain control and the Coinbase Premium turns positive.

A rebound in the premium index could signal renewed institutional confidence, despite Bitcoin's recent price resilience. For now, traders should keep an eye on the $65,500 and $63,000 support levels, as a breakdown could lead to more substantial corrections.

This article was originally published on U.Today