Bitcoin (BTC) signals peak sentiment from US traders, as the Coinbase premium reaches an all-time high. The premium on US dollar markets expanded as BTC moved up to $66,000.
Coinbase is once again trading Bitcoin (BTC) at a premium, raising the disparity with other markets to a three-month high. The metric is seen as a sign of robust demand from retail buyers. But Coinbase is also the supplier of most of the Bitcoin ETF vehicles, when they need to replenish their reserves.
The Coinbase premium rose, while BTC also increased the share of USD trading to 18% of its total volumes. At the same time, the share of USDT has fallen as low as 48%, down from a habitual level above 55%.
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The premium is a volatile indicator that can shift within hours, but the trend has remained viable in the past few weeks. In the past, BTC also carried a premium in Korean won trading, but this time, Upbit prices are slightly lower.
The Coinbase premium also moved up higher since the start of July, showing a shift in buying behaviors, while BTC was still correcting at the beginning of the month. Social media attitudes as measured by Santiment shows FOMO posts increased over the weekend, setting the stage for the new week’s price rally. Bullish sentiment increased by 8.7% over the weekend, to 48% positive messages amplified through social media.
#Bitcoin Coinbase price premium hits 3-month high; US market sentiment is recovering. pic.twitter.com/cEXQT0vsIO
— Ki Young Ju (@ki_young_ju) July 16, 2024
Bitfinex still has BTC at a premium, but spot USD market leads the rally
The only exception to the USD premium is Bitfinex, one of the closely watched BTC exchanges. On Bitfinex, the leading coin traded at a premium against USDT, with a price of $65,790.00. It was Bitfinex that marked the beginning of the current expansion cycle, when analysts noted renewed buying behavior from whales.
Also Read: Spot Bitcoin ETFs see $300M inflows with a seven-day streak
The spot market is also at a premium, while BTC awaits the renewal of open interest. In the past day, open interest on futures recovered to above $18B, with Binance once again the leader at $7.7B.
The latest rally above $65,000 targeted short positions at that level, for now decreasing derivatives open interest. The current rally remains led by spot positions, with predictions of $68,000 coming next.
BTC also revealed strong spot premiums during previous bullish periods, during the climb to an all-time high in Q2.
BTC faces a mix of irrational hype and trading
BTC price action is showing some signs of irrational buying, as well as recent news of known whales like Mr. 100 adding more coins. But the irrational hype may be hampered by traders’ decisions.
The recent buying is still not setting up a long-term structure, or adhering to a price model. Trader open interest may continue to sway the market.
The BTC spot market is also eyeing the scenarios of coins coming from the Mt. Gox payout wallet. Kraken now holds 47K BTC, ready to start paying out creditors in kind. It is still uncertain if the creditors would decide to sell for profit after more than a decade of holding, or keep storing their coins.
The Kraken payout wallet is similar in size to the one liquidated by the German government in the past few weeks. The payout wallet, however, is not tied to a specific intention to sell.
Also Read: Kraken receives funds from Mt. Gox and plans to distribute them to creditors next week
One possible scenario for BTC is that the current derivative trading would continue, but bound in a new range between $65,000 and $71,500. More bullish expectations see BTC rising to $72,000 again by the end of the month.
A new short-term pullback scenario is still possible, but the current week’s rally continues to gain support. In addition to a spot premium and retail buying, another $422.3M flowed into ETFs in the past day.
The presence of trading pressures also means sentiment may be misleading. After the latest climb to $66,000, both crowd and smart money sentiment turned bearish in the short term. But in a single day, the crypto fear and greed index rose from 65 to 69 points, erasing the fearful trading from last week.
Cryptopolitan reporting by Hristina Vasileva
