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The Bitcoin recent foray into $70,000 price territory has again become a hot topic among investors, with many looking at a positive price outlook. As a result of this fascinating price action, the vast majority of long-term holders have seen their holdings cross into profit zone. Particularly, the positive outlook seems to be positive among US-based investors, as shown by the Coinbase premium turning positive. Some see the return of the Coinbase premium as a bullish signal that could continue to drive the price higher.
Coinbase Premium Index Flips Positive
The Coinbase Premium Index (CPI), which had been trading in the negative since May 18, has now turned positive, according to a cryptocurrency analyst who cited data from CryptoQuant. The Coinbase Premium refers to the difference in Bitcoin’s price on Coinbase versus other major exchanges.
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When the premium turns positive, it means Bitcoin is trading at a higher price on Coinbase compared to Binance and, subsequently, other major crypto exchanges. This is important because it shows increased demand for Bitcoin on one of the largest US-based crypto exchanges. On the other hand, a negative premium indicates a lack of substantial buying pressure from US-based traders.
Since Coinbase is a popular entry point for new US crypto investors, a premium price indicates money is flowing into Bitcoin. At the time of writing, data from CryptoQuant shows that this premium recently reached 13.11. While this may seem small, it definitely indicates the beginning of buying pressure that could send Bitcoin on another leg higher
Interestingly, this flip into a positive Coinbase premium has come with a less bullish outlook on Bitcoin among Korean and Asian-based investors, at least in the short term. This information is revealed by CryptoQuant’s Korea Premium Index, which has been on a downtrend in the past two weeks.
Bitcoin Continues To Hold Strong
At the time of writing, Bitcoin is trading at $71,095 and is up by 4.31% amidst increased buying momentum, with the Bitcoin Open Interest recently reaching its all-time high. While a positive Coinbase Premium is a bullish indicator, the context around why it’s happening matters greatly in determining where Bitcoin’s price may go next.
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A large part of the positive premium could be attributed to individual large holders called whales, with on-chain data showing instances of huge Bitcoin transfers from Coinbase to unknown private wallets.
As mentioned earlier, a sustained positive premium and interest from institutions and retail buyers is the most promising scenario for Bitcoin to build on. However, interest from Coinbase whales alone may not be enough to fuel a prolonged, substantial price rally. For Bitcoin to continue its upward trajectory, there must be a corresponding rise in the interest shown by retail investors.
Featured image created with Dall.E, chart from Tradingview.com
