Data shows that a Bitcoin indicator has recently formed a pattern that has proved to be quite bullish regarding the cryptocurrency’s price.
Bitcoin Coinbase Premium Index Has Crossed Above Its 14-Day SMA
In a recent post on X, the on-chain analytics firm CryptoQuant discussed a pattern that has formed in the Bitcoin Coinbase Premium Index. The “Coinbase Premium Index” is an important indicator that keeps track of the percentage difference between the Bitcoin price listed on Coinbase (USD pair) and that on Binance (USDT pair).
This indicator is essential for determining how the buying or selling behaviors differ between the user bases of these two cryptocurrency exchange titans. Positive values indicate that users on Coinbase are buying at a higher rate or selling at a lower rate compared to those on Binance. Conversely, negative values suggest that Binance users have pushed the BTC price higher than on Coinbase.
As illustrated in the chart shared by CryptoQuant, the Bitcoin Coinbase Premium Index had plunged below its 14-day simple moving average (SMA) last month, coinciding with a decline in the cryptocurrency’s price. This downturn suggested that the shift in the metric resulted not from increased buying activity on Binance but rather from selling pressure among Coinbase investors.
The activity of Coinbase users, who are predominantly from the United States, has played a pivotal role in Bitcoin’s price action this year, with the asset’s value often reflecting trends in the Coinbase Premium Index. Therefore, it’s no surprise that these investors contributed to the recent market downturn.
However, the chart indicates a reversal in trend, as the Bitcoin Coinbase Premium Index has recently surged, crossing back above the 14-day SMA. This rebound may signify a return of market momentum, suggesting a potential shift in investor sentiment.
CryptoQuant noted that the last time Bitcoin displayed a similar trend was in November. Following that crossover, the indicator entered the positive region, and Bitcoin experienced a remarkable rally from the $69,000 level to a new all-time high of $108,000.
It remains to be seen whether this recent trend will spur a new wave of buying among American traders and result in a similarly bullish outcome for Bitcoin. So far, positive signs have emerged, with the asset recovering above the $100,000 mark since the crossover occurred.
BTC Price
As of writing, Bitcoin is trading at approximately $100,900, reflecting an increase of over 7% in the past week.
