Coinbase Bitcoin Premium Flips Red For First Time Since May – A Bullish Signal Or Warning Shot?
Crypto markets just got a jolt – Coinbase's Bitcoin premium has turned negative for the first time in three months. Here's why traders are watching this metric like hawks.
The premium's sudden reversal suggests shifting dynamics between retail and institutional demand. When Coinbase (the retail darling) trades at a discount to other exchanges, it often signals cooling enthusiasm from smaller investors.
But before the bears start celebrating – remember this same pattern preceded the 2023 rally. Market veterans know these flips can be contrarian indicators when they occur after extended periods of positivity.
The last time this happened? May 2025 – right before Bitcoin ripped 40% in six weeks. Though Wall Street analysts will probably still claim they 'saw it coming' while furiously revising their price targets.
One thing's certain: When the premium disappears, volatility usually follows. Buckle up.
Coinbase Bitcoin Premium In The Red
CryptoQuant data shows that the Coinbase Bitcoin Premium Index is at -0.00254829, marking the first time it has been in the red since May 29, when it was at -0.01626105. This Index tracks the difference between the Bitcoin price on Coinbase and the Bitcoin price on Binance. It is also used to gauge the spot demand for BTC from institutional and retail investors in the U.S.
As such, this development suggests that the demand for BTC among U.S. investors is currently low. This is significant considering that bitcoin rallies to new highs have coincided with the Coinbase premium being in positive territory. This highlights how much demand from the U.S. contributes to BTC’s uptrend.
In recent times, this demand has mainly come from the Bitcoin ETFs, with Coinbase acting as a custodian for eight out of the eleven spot BTC funds. Notably, the drop in the Coinbase Bitcoin premium coincides with the drop in the net inflows and increase in outflows from these funds.
SoSo Value data shows that these funds recorded net outflows of $114.83 million on July 31. Before now, they had also gone on a 3-day streak of consecutive net outflows between July 21 and 23. This indicates a wave of profit-taking among these investors, especially following the recent Bitcoin rally to a new all-time high (ATH) of $123,000.
In an X post, CryptoQuant also confirmed this wave of profit-taking. The platform revealed that Bitcoin just saw its third major profit-taking wave of this bull run. Realized profits spiked to between $6 and $8 billion in late July, similar to March and December 2024 peaks. CryptoQuant added that it was new whales who led the selling above $120,000.
New Investor Dominance Is Growing With Market In Stable Condition
In a CryptoQuant on-chain analysis, analyst Axel revealed that new investor dominance is growing and that the market is still stable in this late Bitcoin bull cycle phase. He alluded to the demand and supply between new and old investors metric and noted that the peaks of 64% in March 2024 and 72% in December 2024 coincided with local price maximums.
The analyst noted that during those periods, the influx of new liquidity into Bitcoin was exhausted, and old holders began actively taking profits. However, this time is different, as the current value of the demand and supply between new and old investors is 30%, which is only half of the overheated levels.
Axel added that the trend is directed upward as the cumulative activity of young coins has been steadily growing since July 2024. The analyst remarked that this indicates that a notable LAYER of new buyers is entering the Bitcoin market. Meanwhile, pressure from the old holders is not yet critical.
At the time of writing, the bitcoin price is trading at around $115,550, down in the last 24 hours, according to data from CoinMarketCap.
