The Coinbase Premium Index has turned bullish for the first time this year, its first reversal since December 16. The reversal in the Coinbase premium came after a shift in market sentiment as Bitcoin price continues to trade above $100k.
The index had plummeted earlier as investors began to demonstrate caution about BTC’s price, which entered a range-bound motion on December 19. The shift came when Bitcoin’s price crossed the $100K mark yesterday after it experienced a 15% correction from its all-time high.
Recent Bitcoin purchases fuel bullish momentum
Coinbase Bitcoin buyers are bullish!
The Coinbase premium index has completely reversed course and is now back in the green 👇 https://t.co/305czX0Prg pic.twitter.com/9Guodlx7l3
— Nic (@nicrypto) January 7, 2025
The Coinbase Premium Index helps measure the difference between the price of BTC on Coinbase and Binance. When the index turns positive, it indicates an uptick in demand from the U.S. market, and the opposite is true when it is negative.
Microstrategy bought 1,070 BTC, worth $101 million earlier in the week, marking its ninth week of consecutive purchases. Whale Alert data also revealed an accumulation trend in the market after an investor recently moved 1,850 Bitcoins from a Binance wallet to an unknown wallet. Another investor also transferred 3,999 BTC from an unknown wallet to a Coinbase wallet.
Data from CryptoQuant revealed that as the Coinbase Premium Index turned positive, a single block outflow of 4,012 BTC was also recorded from Coinbase yesterday. The analytic firm also confirmed that the data points prove that there is a dominance of buying pressure in the American market. The platform further revealed that Bitcoin’s 14-day Simple Moving Average also turned positive 3 days ago, the first time in 3 years.
BTC’s price has surged by 4% in the last 72 hours, a move that aligns with historical contexts. According to CryptoQuant analysts, when the index last turned positive in November last year, Bitcoin’s price ascended from $69,000 to $108,000. The firm’s analysts also maintained that if U.S. investors are back in action, Bitcoin’s price might surge and reach new all-time highs.
Bitcoin surpasses $100K as Coinbase Premium Index turns positive
BTC has already surpassed the $100K resistance level and currently trades above $101,000, recording a 2.47% increase in the last 24 hours as of publication time.
Bitfinex reported that the Liquidity Inventory Ratio, a measure of how long the existing Bitcoin supply can meet demand, dipped from 41 months in October to just 6.6 months. The report also indicated that the drop reflects a constriction in Bitcoin’s available supply and that growing demand has outpaced the sell-side liquidity.
CryptoQuant also noted that 36% of Bitcoin’s supply had been traded in the past month, which signaled increased market activity. Crypto Dan, an analyst at CryptoQuant, added that the long-term trend remains downward, which suggests that the market will reach its cycle peak by Q1 2025 or, at the latest, by Q2 2025.
Another Bitcoin maxi highlighted that BTC’s monthly chart illustrated a “nasty” setup from its previous bull run. They predict that if the market follows a similar path, the price of Bitcoin could go as high as $200K.
Another CryptoQuant analyst also revealed that if there are no “black swan” events in the current cycle, the market could resemble the 2017 bull cycle. Adler maintains that the current cycle will be characterized by a bullish trend with minimal pullbacks to the metric level of 80%.
Spot Bitcoin ETFs (exchange-traded funds) have also gained momentum after $908 million flowed into ETFs on January 3. Fidelity’s FBTC led with $357 million in inflows, trailed by Blackrock’s IBIT with $253 million.
“The ETF issuers almost all trade and custody with Coinbase so they tend to push the premium or discount based on demand for the ETF.”
~Joe McCann, Founder and CEO of Asymmetric.
A similar report by 10xResearch revealed that Bitcoin could approach its all-time high of $108,353 ahead of Trump’s inauguration. The report also suggested that BTC could have a positive start to the year, followed by a slight pullback leading into the U.S. Consumer Price Index (CPI) data release on January 15. The firm added that a rally could follow into Trump’s inauguration on January 20 but could die down ahead of the FOMC meeting on January 29.
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