Data shows that Bitcoin users on the Coinbase exchange have been selling recently, a potential reason behind BTC’s drop below $58,000.
Bitcoin slipped below $58,000 in its latest drop
Contrary to what investors might have hoped, Bitcoin does not appear to have weathered the bearish winds, as the asset suffered another setback over the weekend. During this latest drop, BTC hit a low of $57,100, a level not seen since mid-August.
The chart below shows what the asset’s recent trajectory looks like.
The price of the coin seems to have been sliding down over the last few days | Source: BTCUSD on TradingView
As for what might be behind this price drop, perhaps an indicator called the Coinbase Premium Index could tell at least part of the story.
The Coinbase Premium BTC Index recently turned red
As one analyst pointed out in a CryptoQuant Quicktake article, the Coinbase Premium Index has recently reversed its trend. The “Coinbase Premium Index” is an indicator that tracks the percentage difference between Bitcoin prices listed on Coinbase (USD pair) and Binance (USDT pair).
When the value of this metric is positive, it means that the price of BTC listed on Coinbase is currently higher than that of Binance. Such a trend implies that Coinbase users are participating in a greater number of purchases or a smaller number of sales than investors using Binance.
On the other hand, the negative indicator suggests that Coinbase may be seeing higher selling pressure than Binance since the price is currently lower there.
Now here is a chart that shows the trend of the Coinbase Premium Bitcoin Index over the past month:
Looks like the value of the metric has been under the zero mark in recent days | Source: CryptoQuant
As the chart above shows, the Coinbase Premium Bitcoin Index was in positive territory since the crash below $50,000 in early August until a few days ago.
This buying surge from Coinbase users may have facilitated the cryptocurrency’s recovery during the period. In recent days, however, the indicator has once again moved into negative territory and with this change, the asset’s price has registered a decline.
Given this trend, it would appear that the shift from buying to selling by investors on Coinbase may have played at least some role in Bitcoin’s latest drop.
The price of BTC appears to be following the Coinbase Premium Index, which is nothing new this year, as the cryptocurrency has been reacting closely to the indicator’s movements over the past few months.
This may be because Coinbase is the preferred platform for US institutional investors, so every time the index changes direction, it suggests that these large entities have changed their behavior, which is naturally reflected in the value of the coin.
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com
