There is a popular indicator that crypto experts are closely watching for clues as to whether U.S.-based investors, especially institutions, are actually buying bitcoin. or sitting on the sidelines watching the market.
It’s called the Coinbase Premium Index and is currently issuing the most sustained bullish signal since bitcoin traded at record 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 streak of positive results since October.
Here’s why it’s important
Coinbase, listed on Nasdaq, is the go-to exchange for U.S. institutions – corporate treasuries, hedge funds and regulated alternative investment vehicles such as ETFs. So, when the price of Bitcoin trades at a higher price on Coinbase compared to prices on offshore giant Binance, it means that US buyers are aggressive in purchasing BTC. Historically, heavy buying by U.S. investors has been a hallmark of bull runs.
Conversely, a negative premium or discount indicates that U.S. demand is lagging while foreign markets are doing the heavy lifting. As a reminder, the premium was mainly negative from mid-December to the end of February. During this period, BTC rose from around $100,000 to almost $60,000.
The latest round of positive results is all the more important as it shows sustained demand due to geopolitical noise and the DeFi crisis.
It’s no surprise that bitcoin is recovering. The cryptocurrency surpassed $78,000 on Wednesday, bringing the monthly gain to 14%.
