U.Today – Divergence in Coinbase Premium and Bitcoin Price

A notable divergence has recently formed between the Coinbase (NASDAQ:COIN) Premium Index and Bitcoin's price, as noted by CryptoQuant. This divergence tilts toward the negative side despite a significant rally in Bitcoin's price.

Surging Bitcoin Price and Declining Coinbase Premium Index

Over the years, short-term price trends have been predicted using momentum analysis with Moving Averages (MAs). However, as the market evolves, alternative measures are employed.

In the last two weeks, a notable divergence formed between the Coinbase Premium Index and Bitcoin's price. This divergence occurred as BTC's price rose from $94,000 to $108,000. The flagship cryptocurrency is currently trading at $104,097.77, down 2.4% at the time of writing.

For context, the Coinbase Premium Index reflects the demand for Bitcoin in the United States. It is computed by tracking activity on leading American cryptocurrency exchanges like Coinbase and Binance. A higher premium suggests increased buying demand from U.S. investors.

The decline of the Coinbase Premium poses a significant concern, coinciding with a season of increased demand from North American investors. The upcoming January 2024 launch of Bitcoin Exchange Traded Funds (ETFs) and the recent macroeconomic climate have also shifted market sentiment.

According to blockchain analytics platform CryptoQuant, "If the U.S.-based demand has not supported this price surge, it could indicate underlying weakness in medium-term upward momentum." Investors are advised to remain cautious and monitor this development closely.

Bitcoin Price Could Surge — Or Not

One week ago, the situation was quite different, as U.Today reported that as Bitcoin's price plummeted, the Coinbase Premium jumped.

Despite the recent price reversals amid all-time high rallies, the market remains hopeful for a major rebound soon. From a midterm perspective, focus is now on the weekly candle's closure around the $105,149 level.

If a false breakout occurs, the Bitcoin price risks dropping to a new low of $100,000.

This article was originally published on U.Today