Bitcoin Plunges Under $58,000 As Coinbase Users Sell BTC

Data shows Bitcoin users on the Coinbase exchange have been selling recently, a potential reason behind BTC’s drop under $58,000.

Bitcoin Has Slipped Under The $58,000 Level In Its Latest Plunge

Contrary to what investors may have hoped, Bitcoin hasn’t appeared to have shaken off bearish winds as the asset has witnessed another setback over the weekend. In this latest plunge, BTC hit $57,100 at its lowest, a level that hadn’t been seen since mid-August.

The below chart shows what the asset’s recent trajectory has looked like.

The price of the coin seems to have been sliding down over the last few days | Source: BTCUSD on TradingView

As for what could be behind this price drawdown, perhaps an indicator called the Coinbase Premium Index could tell at least a part of the story.

BTC Coinbase Premium Index Has Turned Red Recently

As pointed out by an analyst in a CryptoQuant Quicktake post, the Coinbase Premium Index has flipped its trend recently. The “Coinbase Premium Index” is an indicator that keeps track of the percentage difference between the Bitcoin prices listed on Coinbase (USD pair) and Binance (USDT pair).

When the value of this metric is positive, it means the BTC price listed on Coinbase is higher than on Binance right now. Such a trend implies the users on Coinbase are participating in a higher amount of buying or a lower amount of selling than the investors using Binance.

On the other hand, the negative indicator suggests Coinbase may be observing a higher selling pressure than Binance since the price on there is currently lower.

Now, here is a chart that shows the trend in the Bitcoin Coinbase Premium Index over the past month or so:

Looks like the value of the metric has been under the zero mark in recent days | Source: CryptoQuant

As displayed in the above graph, the Bitcoin Coinbase Premium Index had been inside the positive territory since the crash under $50,000 in early August until a few days back.

This buying push from the Coinbase users may have facilitated the cryptocurrency’s recovery during the period. In the last few days, however, the indicator has flipped into negative territory again and with this shift, the asset’s price has registered a decline.

Given this trend, it would appear that the change towards selling from buying from the investors on Coinbase may have played at least some sort of role in the latest Bitcoin plunge.

BTC’s price seems to follow the Coinbase Premium Index, which is nothing new for this year, as the cryptocurrency has been closely reacting to movements in the indicator during the last few months.

This may be because Coinbase is the preferred platform of the American institutional investors, so whenever the index changes direction, it suggests these large entities have changed their behavior, which naturally reflects in the coin’s value.

Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com