There is a popular indicator that crypto experts are watching closely for signs about whether US-based investors, especially institutions, are really buying bitcoin. or sit on the sidelines watching the market.
It’s called the Coinbase Premium Index and as of now it’s giving off the most sustained bullish signal since bitcoin traded to all-time highs above $126,000 in October.
This index has been positive for 14 consecutive days, from April 9 to today, April 22, according to data source Coinglass. This is the longest uninterrupted stretch of positive readings since October.
Here’s why it’s important
Coinbase, listed on Nasdaq, is the exchange venue for U.S. institutions: corporate treasuries, hedge funds, and regulated alternative investment vehicles like ETFs. So when the price of bitcoin is trading at a premium on Coinbase relative to prices on foreign giant Binance, it means that American buyers are being aggressive in purchasing BTC. Historically, heavy buying by US investors has been a feature of bull runs.
The opposite, a negative premium or discount, indicates that U.S. demand is lagging while foreign markets do the heavy lifting. For context, the premium was mostly negative from mid-December to the end of February. During that time, BTC fell from about $100,000 to almost $60,000.
The latest streak of positive readings is even more important because it shows sustained demand through the geopolitical noise and the DeFi crisis.
It’s no surprise that bitcoin is going up. The cryptocurrency surpassed $78,000 on Wednesday, bringing the gain so far this month to 14%.
