Data shows that the Ethereum Coinbase Premium Index remained in negative territory even as the price rallied above $2,100.
Ethereum Coinbase Premium Index is red right now
As Arab Chain pointed out in a CryptoQuant Quicktake article, the Coinbase Premium Index has recently been in the red zone for Ethereum. This indicator tracks the percentage difference between the ETH price indicated on Coinbase (USD pair) and that on Binance (USDT pair).
Below is a chart that shows the trend of the Ethereum Coinbase Premium Index over the past month.
As the chart shows, the Coinbase Premium Ethereum Index has fallen into the negative region over the past few days, indicating that BTC has been trading at a lower rate on Coinbase compared to Binance. In other words, users of the former exert higher selling pressure than the latter.
Initially, the indicator’s decline came as the asset observed a retracement from last week’s highs. The timing suggests that Coinbase traders led the price decline. But it is interesting to note that even though the Coinbase Premium Index remained at a value of -0.0149 over the past day, the price of ETH actually rebounded above the $2,100 level.
This trend could be a sign that Binance investors have helped fuel the surge. If the Coinbase Premium index remains red in the coming days, it is possible that the movement will run out of steam. Indeed, in recent times, American institutional entities, which use Coinbase as their preferred platform, tend to be the drivers of the cryptocurrency sector.
Whenever demand from these investors is lacking, Ethereum and other major tokens like Bitcoin tend to suffer. So far, the rebound has failed to attract interest from U.S.-based whales. So it only remains to be seen whether things will change as the rally unfolds.
The Coinbase Premium Index only tells a short-term story of the market. From a longer-term perspective, Ethereum’s rebound from $1,800 over the past month occurred after a retest of a significant level in the market value-to-realized value ratio (MVRV), as highlighted by analyst Ali Martinez in an article
The MVRV ratio essentially tells us about the profit and loss situation of all ETH investors. As shown in the chart below, the Ethereum MVRV ratio plunged below 1.0 during this year’s pullback, implying that the entire network entered a loss state.
The metric eventually dropped to the 0.8 level, which has often served as a low point for the cryptocurrency in the past. “Historically, this is a generational buying zone,” notes the analyst. Since this retest, ETH has observed its rebound.
ETH Price
At the time of writing, Ethereum is trading around $2,160, down 7% over the past week.
