Bitcoin 'Seller Pressure' Causes Coinbase Premium Index to Drop to One-Year Low
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As 2024 approaches its end, the Coinbase Premium Index has dropped to -0.23, marking a 12-month low, reflecting a significant increase in seller pressure in the U.S. market, which may limit Bitcoin's short-term price recovery potential.
Coinbase Premium Index and Market Trends
The Coinbase Premium Index is an important indicator of retail Bitcoin demand in the U.S. A positive index indicates strong buyer demand, while a negative value shows that seller pressure is dominant.
Recent Performance: On December 31, the index fell to -0.23, while the Bitcoin price hit a monthly low of $91,479.
Historical Comparison: A similar drop occurred in January 2024, also in a liquidity-constrained market environment.
Liquidity Constraints and Market Volatility
Low liquidity is one of the main reasons for market volatility at year-end.
Selling Pressure: As year-end settlements approach, retail demand weakens, leading to market pressure.
Recovery Challenges: Analysts point out that unless macroeconomic conditions improve or investor interest rebounds, Bitcoin may struggle to rebound significantly in the short term.
Macroeconomics and Market Expectations
The upcoming U.S. presidential inauguration is seen as a potential market driver.
Market Forecasts: Analysts expect Bitcoin's price may experience a strong rebound after the inauguration but could face a correction of up to 30% in the short term.
Focus: The inflow of funds from institutions and retail investors may determine the future direction of the market.
Profit-taking Pressure from Long-term Holders
With Bitcoin prices nearing historical highs, long-term holders may have the motivation to take profits.
Selling Risks: Data shows that the average realized price for long-term holders is about $24,298, while the current price is close to $94,820, indicating significant profit potential.
Market Impact: A large-scale sell-off could further exacerbate short-term market volatility.
Summary
The sluggishness of the Coinbase Premium Index reveals the current state of insufficient retail demand, while year-end liquidity constraints and profit-taking pressure may continue to pose challenges for Bitcoin's short-term price. However, with the push of macroeconomic events, there may still be long-term potential for market improvement.
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