Coinbase Bitcoin Premium Index shows that American investors are not as enthusiastic about the digital currency as overseas buyers.
In a significant move, Bitcoin’s (BTC) price shows signs of a shift in investor behavior, drawing on the Coinbase Premium Indicator (CPI). According to Coinglass, the Coinbase premium has turned negative for the first time since the February 3 crash.
Notably, the CPI is the metric that measures the price gap between BTC on Coinbase (in USD) and Binance (in USDT). This means Bitcoin is now cheaper on Coinbase than Binance, suggesting weaker buying pressure from U.S. traders.
Historically, a negative premium indicates that U.S. traders are becoming more cautious while offshore traders drive the market.
Coinbase Premium Signals Change in Buying Power
When Bitcoin surged past $70,000 in early November, the Coinbase premium reached its highest level in two months.
This showed that U.S. investors were leading the rise. Now, things have changed. A negative premium means U.S. traders are stepping back while investors from other countries push the price.
This change kicked in before Wednesday’s U.S. Consumer Price Index (CPI) report, which showed higher inflation data. Investors are waiting to see how the 3.3% jump in CPI will affect the Federal Reserve’s decisions on interest rates. With higher inflation, the Fed will likely adopt a stricter rate-cut measures, which might hurt Bitcoin’s price.
Now that the Coinbase premium is negative, and CPI higher, the price of Bitcoin fell below the $95,000 support. If it turns positive again, it could mean renewed buying interest, and it may reverse the price more.
Bitcoin Market Movement and Sentiment
In January, Bitcoin’s price set a new record as it jumped above the $109,000 mark based on the hype around President Donald Trump’s victory. Since then, the coin has shed some gains. Per current market data, it is trading at $96,192, down by 2.08% in 24 hours.
Even though some people think the price might go down, many investors still believe in future gains.
A few factors are fueling this positive outlook. This includes the entry of institutional investors and the emergence of initiatives toward clearer regulations from the US CFTC and SEC, respectively.
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