The price of Bitcoin (BTC) rebounded in the past two days after falling to just $ 28,850. After the rapid rebound, however, BTC is unable to break past heavy resistance at $ 33,000 on Jan. 23, withdrawn to under $ 32,000 at time of writing.
Coinbase Premium’s return is bullish, but now what?
Previously, when the price of Bitcoin started to drop below $ 32,000, BTC was trading much lower on Coinbase than on Binance.
The lack of premium on Coinbase was a concern for two main reasons. First, Bitcoin is, of course, trading higher on Coinbase due to Tether’s small premium.
Second, when Coinbase sees a lower price than other exchanges, it shows that there is high selling pressure in the US market.
As the selling pressure on Bitcoin started to increase in the US market, the price of BTC felt steep in a short period of time.
But almost immediately after BTC rebounded from $ 30,000, the Coinbase bounty reappeared. At the time of writing, BTC is about $ 40 higher on Coinbase than Binance.
The Coinbase bounty resurfacing after nearly 12 hours is a positive sign of a possible trend reversal.
Signs of “institutional exhaustion”
But everyone is far from optimistic in the short term. Analysts at QCP Capital, a team of traders in Asia, are seeing several signs of “institutional exhaustion”.
“Signs of Institutional Exhaustion: We did a time zone analysis that breaks down BTC moves by Asian hours versus US hours (12 hours each). As of last March, the clear pattern has been a relentless US purchase, with Asian whales and miners on offer. “
Traders believed that the strength in the US trading session lost momentum for the first time.
In fact, most of BTC’s selling pressure came from Asia last week. This marks an important shift in market sentiment. They added:
But after the BTC top 2 weeks ago, the force in US hours has lost momentum for the first time. This is a clear sign of depletion of demand from the US institutions and companies that were the main drivers of this bull run. “
What Comes Next for Bitcoin?
Bitcoin is at risk of a correction phase during the first quarter of 2021 if institutional demand for BTC declines.
Several institution-oriented platforms and vehicles, such as Grayscale, are still seeing a large influx, indicating solid institutional demand. At the same time, MicroStrategy continues to buy Bitcoin at every dip with the last purchase on Friday totaling $ 10 million.
“Today, $ 31,000 was a bag of strong support, so not everyone is selling anyway,” said Chad Steinglass, chief of trade at Crosstower, a capital markets company in digital assets.
“We’ll have to wait and see if that wall continues, or if institutions continue to pile up. If they do, the trend is likely to recover and continue. If they go to the sidelines pending more regulatory advice, their lack of buying flows are felt acutely. “
At the same time, the likelihood of a broader correction remains if the US market continues to see an overall decline in willingness to accumulate BTC, particularly if the dollar continues to recover in 2021.