Coinbase Premium Stays High Despite Bitcoin Slump, What Now?

Coinbase Premium, a metric representing the percentage difference between the price of Bitcoin (BTC) on Coinbase Pro and Binance, has continued to surge despite a dip in BTC’s price.

In a striking market volatility that saw the price of Bitcoin plunge to $94,000, the Coinbase Premium remained unaffected.

Coinbase Premium Reflects Institutional Confidence

CrptoQuant, an on-chain analytics platform, noted this development with a post on X that reads, “Bitcoin Plummets, but Coinbase Premium Surges.”

For clarity, this metric provides valuable insight into the purchase pattern of the world’s leading digital asset. A higher premium signals increased demand, particularly from the US. investors.

Notably, Coinbase is a platform favored by institutional investors in the U.S. compared to other exchanges like Binance or Bybit.

Binance has more retail investor base than others. Hence, when the Coinbase Premium records a spike, it implies that investors are buying Bitcoin at a higher price on Coinbase.

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This also infers that there is a strong demand from U.S. institutional investors.

It signals that during periods of excessive panic offloading, especially on Binance, institutional players see this as an opportunity to accumulate Bitcoin at lower prices.

The positive of this aggressive buying strategy is that it could trigger a price rebound. This is a result of institutional players’ demand counteracting the selling pressure.

Bitcoin’s Volatility Sparks Liquidations and Optimism

Amid these market intrigues, Bitcoin price plummeted significantly in earlier trading today. As market volatility set in, Bitcoin dropped to around $94,300.

This dip is notable, considering BTC had earlier soared to a record high of $104,000 on Thursday, December 5.

In the last 24 hours, Bitcoin’s fluctuation has forced a broad market liquidation of of over $1.6 billion in crypto positions. This indicates the unraveling of bets on Bitcoin. According to CoinGlass data, the overall market value has crashed by 3.73%.

As of this writing, the price of Bitcoin was exchanging hands at $95,516.24, a 2.56% decrease in the last 24 hours.

Despite this significant price drop, market volume has soared by 46.74% to $113.18 billion, suggesting that investors are actively accumulating the asset. This happens when bullish sentiments are high, and the market anticipates a rebound.

Analysts expect the coin to post a recovery soon if it can sustain the current momentum.

Additionally, many believe that as President-elect Donald Trump’s inauguration inches closer, bullish sentiments could once again drive up prices of digital assets in the cryptocurrency sector.

Political Shifts and Market Sentiment

Interestingly, Bitcoin broke the psychological $100,000 barrier after Trump announced Paul Atkins as the replacement for the U.S Securities and Exchange Commission (SEC) Chair, Gary Gensler.

Atkins is generally considered more pro-crypto than the incumbent Gensler. This notion fueled optimism that the new administration might favor crypto, increasing investor confidence and price spikes.

Notably, the President-elect congratulated Bitcoin holders when the coin made the historic cross over $100,000.

Although crypto assets, including Bitcoin, remain volatile and unpredictable, market observers insist trends largely influence these assets. They maintain that the current trend is bullish for Bitcoin, and this momentum could likely sustain the soaring price of the asset.

Additionally, the fear of missing out (FOMO) has attracted a younger generation of investors to Bitcoin. This might prove sufficient to push BTC’s price on the upward trajectory.