An analyst has explained that a Bitcoin price recovery may be highly likely based on this pattern forming in a metric.
Bitcoin Coinbase Premium Gap Is Becoming Less Negative
In a CryptoQuant Quicktake post, an analyst pointed out how the selling pressure on Coinbase has been diminishing recently. The relevant indicator here is the “Coinbase Premium Gap,” which keeps track of the difference between the Bitcoin prices listed on cryptocurrency exchanges Coinbase and Binance.
When the value of this metric is positive, it means that the price listed on Coinbase is greater than that on Binance right now. Such a trend suggests either the buying pressure on the former is higher or the selling pressure is lower.
On the other hand, negative values imply the buying pressure on Binance may be greater as the price of the cryptocurrency listed there is higher.
Now, here is a chart that shows the trend in the Bitcoin Coinbase Premium Gap over the last couple of weeks:
The value of the metric appears to have been negative recently | Source: CryptoQuant
Between the start of the month and around the time the Bitcoin spot ETFs went live, the Coinbase Premium Gap had remained optimistic, implying that buying pressure on the exchange had been stronger.
The exchange is popularly known to be used by US institutional investors, so it’s possible that the positive premium was due to these large entities constantly accumulating in the leadup to the ETFs.
The chart reveals that the Coinbase Premium Gap took a sharp plunge into negative territory once this event was over, implying that the American holders significantly increased their selling pressure.
Coinciding with this negative spike, Bitcoin observed its first major post-ETF plunge. This event started the indicator’s extended run inside the red zone, a sharp contrast to its trend in the year thus far.
Almost a week after this first crash, the cryptocurrency registered another sharp plummet, and with this drawdown, too, the selling pressure on Coinbase went up.
During the past few days, BTC has experienced another wave of price drops, but this time, the Coinbase Premium Gap hasn’t reached highly negative values. Instead, the indicator even briefly revisited the neutral mark during this plunge.
This would imply that the selling pressure from the US institutional traders may now be weakening. While they are still likely selling, the degree of their selling isn’t much higher than that of the global investors who use Binance.
“In the current range, there is a high likelihood of a rapid price recovery,” the analyst says, based on this pattern that has taken shape in the Coinbase Premium Gap.
BTC Price
Following the latest drawdown, Bitcoin has broken under the $39,000 level for the first time since the start of December.
Looks like the price of the asset has been going down recently | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com, CryptoQuant.com
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