CryptoQuant QuickTake analyst now has attention was drawn to a certain trend related to the Coinbase Premium Index (CPI), which currently suggests that a grim move is in store for Bitcoin.
This indicator, when considered alongside its 14-day elementary moving average (SMA14), has often shown significant correlation with Bitcoin selling pressure, which sheds lightweight on just how significant its impact is on the market.
Bull or Bear: What Does the Coinbase Index Tell Us?
Before we delve into what the Coinbase Premium Index currently signals for Bitcoin, it’s worth explaining the nature of this indicator to understand its credibility. Interestingly, the Coinbase Premium Index (CPI) is an analytical tool that measures the variance between the price of Bitcoin on Coinbase Pro and its price on other major exchanges.
A negative CPI value suggests that Bitcoin is trading at a lower price on Coinbase Pro compared to other platforms, which typically indicates selling pressure in the US market.
Related Reading: Bitcoin Heading Towards $63,000: Key Indicators Signal Further Decline – Time to Sell?
According to CryptoQuant analyst “burakkesmeci,” the phenomenon has become more common since the United States approved spot trading of exchange-traded funds (ETFs), which now appears to be reinforcing the CPI’s importance as a leading indicator.
When the Coinbase Premium Index is below SMA14, selling pressure increases
“When looking at the 2024 data, we can clearly see that bitcoin price corrections occurred when the CPI (Coinbase Premium Index) fell below its SMA14.” – Author @burak_kesmeci
Link 👇https://t.co/Bc3N1cfh5W photo:twitter.com/tN99LNhNkr
— CryptoQuant.com (@cryptoquant_com) July 30, 2024
The analyst revealed that the data for 2024 reveals a clear pattern: Bitcoin often encounters price corrections when the CPI falls below the SMA14. This particular behavior indicates bearish sentiment when the index falls below the moving average, signaling increased selling activity.
Currently, the CPI is -0.008, which contrasts with the SMA14 at 0.020. This discrepancy, according to burakkesmeci, “indicates that sellers have a stronger position in the US market.”
Bitcoin Market Performance
Looking at Bitcoin’s market performance so far, the seller-driven market phenomenon, as indicated by the CPI, seems to be true. Bitcoin is currently trading at $65,805, down 3% in the last 24 hours and about 2% in the last week.
In the past day alone, the asset’s market capitalization has fallen by more than $40 billion, a stark contrast to 24-hour trading volume, which saw the opposite trend — from under $30 billion yesterday to $36.7 billion at the time of writing.
Regardless of the price performance, a handful of cryptocurrency analysts remain confident. For example, Crypto Rover, a well-known enthusiast in the cryptocurrency space, revealed that Bitcoin is currently consolidating within a noteworthy bull flag pattern.
According to Rover, “This is the worst time to be pessimistic. The breakout will be huge.”
#Bitcoin is essentially consolidating into one of the biggest bull flags I’ve ever seen.
This is the worst time to be gloomy.
The breakout will be huge. photo:twitter.com/oauSgiBNRY
— Crypto Rover (@rovercrc) July 30, 2024
Featured image created with DALL-E, chart from TradingView
