Bitcoin’s Coinbase Discount Signals Cooling US Demand—What Traders Need to Know
Bitcoin is trading at an unusual discount on Coinbase as US spot market demand weakens—a divergence that's got crypto veterans raising eyebrows. Here's the breakdown.
The arbitrage gap nobody's exploiting
Typically, institutional-heavy platforms like Coinbase command premium prices. But with the current discount, even quant firms aren't bridging the spread—suggesting deeper liquidity issues.
Wall Street's crypto fatigue?
Some speculate the softening demand reflects traditional finance's short attention span—after all, why hold volatile assets when Treasury yields are back to being boringly attractive?
This could either be a temporary blip or the first sign of shifting capital flows. Either way, it's a rare moment when crypto's 'retail vs. institutional' narrative gets flipped on its head.
Market Sentiment Softens Ahead Of Key Economic Data
A full-time crypto trader and investor, Daan Crypto Trades, has highlighted on X that it’s not unusual for Bitcoin to trade at a discount on Coinbase, and this happens quite often during a larger market pullback. However, the current discount is not as substantial as it was in the previous cycle.
The discount is fundamentally created when the market is oversupplied with spot selling pressure originating from the Coinbase platform, particularly from the ETFs, US investors, and institutional investors. Generally, this discount on Coinbase is not the strongest sign, but it points to downward momentum. As seen on the chart, the market rarely bottoms locally without first undergoing such a period of heavy selling, which generates the discount.
Daan noted that this data is similar to tracking ETF flows, and the fact that BTC’s price on Coinbase is negative is not a bullish indicator. However, if the BTC price can sustain or start grinding higher after absorbing this period of heavy selling pressure, which is indicated by the discount, that could be a bullish sign for BTC. “Always compare the data to know how the price is moving,” the expert mentioned.
Why This Cycle Might Last Longer Than Expected
Crypto analyst Batman has highlighted a fascinating perspective from giants like Wintermute, which suggests that the concept of the bitcoin four-year cycle is no longer relevant. However, Wintermute is now calling for a BTC supercycle. Offering his insights on the statement, Batman is supporting the idea using the BTC chart against the Institute for Supply Management (ISM) and Purchasing Managers’ Index (PMI) composite.
According to the expert, risky assets like BTC historically flourish in a growing economy. When the economy shows signs of slowing down, as reflected by the ISM and PMI contracting, it usually coincides with the cycle top for BTC and ushers in a period of price slowdown.
Despite BTC not maintaining an all-time high level, the ISM and PMI are literally just beginning to expand, making this cycle different. A prolonged debt cycle due to the global Covid-19 shutdown may also cause the delay of the BTC cycle, as shown by the ISM and PMI starting to turn around toward an upward direction.
