According to CoinDesk, data from blockchain data analysis company CryptoQuant shows that the Coinbase premium index has fallen to a rare negative level. Since negative values of this depth have often occurred near local lows in price in the past, this could be a sign that Bitcoin is bottoming.
David Lawant, head of research at institutional cryptocurrency trading platform FalconX, said on the X platform:
"Is it always darkest before the dawn? According to my calculations, the last time the Coinbase premium was this negative was in the months before the massive rally from October 2023 to March 2024."
Source: David Lawant
The Coinbase Premium Index measures the price of Bitcoin on Coinbase Pro (widely used by US users and many institutional market participants) versus Bitcoin on the offshore exchange Binance (leading trading volume and popular with retail users) The difference between prices.
The data showed that the Coinbase Premium Index was chronically negative for much of June and May, similar to last year's market downturn in August and September. On Friday, the index slipped to nearly -0.19, its lowest reading on the daily time frame since the FTX exchange collapsed in November 2022.
Coinbase Bitcoin Premium Index (Source: CryptoQuant)
This negative level shows weak demand and selling pressure from U.S. investors, as Bitcoin prices have been consolidating in a range since hitting all-time highs in March. Investors are also increasingly concerned about outflows from U.S. Bitcoin spot ETFs, many of which use Coinbase for settlement, as well as U.S. government sales of seized assets through Coinbase, which may have contributed to price discounts on Coinbase.
However, this depth of negative Coinbase premium has previously occurred when Bitcoin price was near local bottoms, followed by sharp rallies in subsequent months, such as in November 2022 and negative values in August 2023. FalconX’s Lawant told CoinDesk:
“At least recently, the Coinbase premium has become a reliable, confirming and sometimes leading indicator of overall market trends, highlighting the significant influence of the U.S. market in determining market price formation.”
Given that several upcoming catalysts are U.S.-centric, such as ETF flows, U.S. monetary policy and the presidential election, Lawant said he expects this trend to continue, saying:
"My gut tells me that the next six to 12 months are going to be exciting — and potentially volatile."
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