Bitcoin Coinbase Premium Falls to 3-Year Low

BTC premiums on the largest US-based cryptocurrency exchanges have plummeted to negative levels last seen almost three years ago. This comes during a broader market correction and suggests that whales and larger players have used Coinbase to sell a significant portion of their Bitcoin holdings.

Bitcoin Coinbase Premium Dump Hard

Blockchain analytics firm CryptoQuant compares BTC prices on the two largest cryptocurrency exchanges, Binance and Coinbase, with Tether and USD, respectively, to see if there are differences, labeled “Coinbase Premium”.

This indicator tracks the movement of BTC by institutions and large players (whales) on Coinbase (and Coinbase Pro), which is generally considered a platform for such investors. Essentially, this means that the higher this premium, the more institutional demand exists and vice versa.

According to CryptoQuant, the metric has fallen sharply since the beginning of the month. As the chart below shows, it was “green” for consecutive months, but fell to its lowest position in 35 months. Analyst Resources sees larger investors disposing of their assets from Coinbase.

Bitcoin Coinbase Premium Index. source: Cryptoquant

CryptoQuant analysts wrote:

“The financial markets are currently trading risk-off, so this is not surprising. I expect investors, especially in the traditional financial sector, to reduce their exposure to Bitcoin in such circumstances.”

Bitcoin Crash

The coinbase premium index turned negative as the entire cryptocurrency market, led by BTC, went straight south. The major digital asset dropped $4,000 from $40,000 to $36,000 in just days after significant sales began on Coinbase.

However, the price continued to decline the following day, dropping significantly to $25,300 (at Bitstamp) earlier today. This is the lowest price for BTC since the end of December 2020. Alternative coins are in worse shape with double-digit declines.

This only supports the theory that whales and organs are most likely fuel for recent fertilization. So it will be interesting to track how Coinbase Premium performs over the next week or so.

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