Bitcoin (BTC) is currently trading at a discount on Coinbase, a trend that some experts believe could indicate a price bottom for the largest cryptocurrency. According to a post on X, David Lawant, head of research at FalconX, noted that the last time the “Coinbase Premium Index” was this negative, it preceded a significant rally from October 2023 to March 2024.
The Coinbase Premium Index measures the price difference for Bitcoin between Coinbase, a platform heavily utilized by U.S. users and institutional investors, and Binance, the leading exchange by trading volume favored by retail users. Throughout most of May and June, this index has been negative. On Friday, the index dropped to nearly -0.19, its lowest point since the collapse of the crypto exchange FTX in November 2022.
Negative readings on this index suggest weak demand and selling pressure from U.S. investors. Bitcoin has been trading within a narrow range since reaching all-time highs in March. Investor concerns have been fueled by outflows from U.S.-listed spot BTC exchange-traded funds (ETFs) and the U.S. government’s sales of seized assets through Coinbase.
Historically, deeply negative Coinbase Premium readings have often preceded local price bottoms and subsequent significant rallies. The index’s low in August 2023 came shortly before Bitcoin bottomed around $25,000. The cryptocurrency then traded within a range until October, when it almost doubled in price by January, driven by anticipation for upcoming U.S. Bitcoin ETFs. Most recently, the Coinbase Premium Index dipped to -0.17 during the market capitulation on May 1, when Bitcoin fell to $56,000. Subsequently, BTC rallied about 27% to $72,000 in June before experiencing a decline.
