The Coinbase Premium Index, a key indicator of Bitcoin retail demand in the United States, has dropped to its lowest level in a year, signaling heightened selling pressure. On December 31, the index fell to -0.23, marking its weakest point since January 2024, according to CryptoQuant contributor Burakkesmeci.
Bitcoin Retail Demand Faces Downward Pressure
The premium index, which measures the price difference between Bitcoin on Coinbase and global exchanges, serves as a barometer for U.S. retail investor sentiment. A positive value reflects buying momentum, while a negative reading signals increased selling.
Burakkesmeci attributed the decline to thin year-end liquidity, compounded by a drop in Bitcoin’s price to $91,479—the lowest since late November. He warned that unless macroeconomic conditions shift or retail and institutional interest revives, Bitcoin’s short-term price recovery could remain elusive.
Notably, the index’s last comparable low coincided with the launch of spot Bitcoin ETFs in January 2024 and resurfaced briefly in October before the U.S. elections.
Profit-Taking May Trigger Further Sell-Offs
While short-term sentiment appears strained, long-term Bitcoin holders have emerged as significant beneficiaries of the current market dynamics. Data shows that those holding Bitcoin for over 155 days are sitting on considerable unrealized profits.
According to Bitbo data, the realized price for long-term holders is $24,298, representing a staggering 290% profit margin at Bitcoin’s publication price of $94,820. This profitability could, however, spark additional sell-offs as investors lock in gains heading into 2025.
In contrast, short-term holders—those who acquired Bitcoin less than 155 days ago—are dealing with a significantly higher cost basis, putting them under pressure as prices remain volatile.
Trump’s Inauguration: A Turning Point?
The market is also eyeing the upcoming inauguration of President-elect Donald Trump on January 20, a macroeconomic event that could influence Bitcoin’s trajectory. While some analysts anticipate a temporary price correction of up to 30%, others believe the inauguration could catalyze renewed bullish momentum.
Ryan Lee, chief analyst at Bitget Research, predicts that Bitcoin will resume its rally after late-December’s anticipated correction. However, immediate recovery hinges on renewed confidence from both retail and institutional players.
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