Coinbase Premium Index Drops to Two-Year Low! CoinShares: Signs of improving Bitcoin sentiment

The sentiment in the cryptocurrency market seems to be improving as we head towards July. The Bitcoin spot ETF ended seven consecutive days of net outflows on the 25th, and net inflows reached $73 million on the 28th, setting the highest single-day inflow in two weeks.

In addition, according to digital asset investment product flow data collected by CoinShares, although the last week was the third consecutive week of net outflows, the total outflows have shrunk significantly from the US$598 million and US$582 million in the previous two weeks, and have dropped to net in the latest week. There was an outflow of $30 million.

Digital Asset Investment Products - Weekly Fund Flow Changes

CoinShares: Signs of improving sentiment on Bitcoin

CoinShares said in a report that most digital asset issuers saw small increases compared to previous weeks There were inflows, although this was offset by Grayscale's $153 million outflow.

In terms of products, multi-asset and Bitcoin ETPs led other products with net inflows of US$18 million and US$10 million respectively, and the total outflow of short Bitcoin last week increased to US$4.2 million, indicating that market sentiment may Transforming.

Another range of altcoins also saw inflows, most notably Solana ($1.6 million) and Litecoin ($1.4 million); however, Ethereum saw its largest outflow since August 2022 , totaling $61 million, bringing outflows over the past two weeks to $119 million and making it the asset's worst net flow performer so far this year.

From a regional perspective, the inflow of funds in the United States was US$43 million, while the inflows of Brazil and Australia were US$7.6 million and US$3 million respectively. Negative sentiment permeated Germany, Hong Kong, Canada and Switzerland, with outflows of US$29 million, US$23 million, US$14 million and US$13 million respectively.

Coinbase Premium Index reaches lowest level since 2022/11

In addition to funds flow data suggesting a reversal in Bitcoin sentiment, the Coinbase Premium Index fell to nearly -0.19 on Friday, the highest level since November 2022 FTX lowest level since the crash.

In addition, David Lawant, head of research at cryptocurrency trading platform FalconX, added that the last time the Coinbase Premium Index was so negative was a few months before the sharp rise from October last year to March this year. In other words, the indicator was The negative values ​​in May and June this year echoed the market calm in August and September last year. Therefore, he asked: "Is it always darkest before dawn?" This indicates that he is speculating that the price of Bitcoin is about to bottom out and may move higher next.

The Coinbase Premium Index is the difference between the BTC price on Coinbase and the BTC price on other exchanges. This negative data shows weak demand and selling pressure from US investors. One of the reasons behind this may be that investors are worried about the US government passing through Coinbase The confiscated assets are sold, resulting in a discount on Coinbase’s BTC price.

In the past history, when the Coinbase premium index showed serious negative values, it was often close to the current price bottom, and BTC subsequently rebounded sharply in the next few months. For example:

• In early November 2022, the Coinbase premium index fell The rare low of -0.33 coincided with BTC’s bear market lows below $16,000 before the price surged to nearly $25,000 by February. An increase of more than 50%.

• The index low occurred in August 2023, just weeks before Bitcoin bottomed around $25,000. Subsequently, Bitcoin rose from October to January, nearly doubling in price, and hit another all-time high in March.

• Most recently, the indicator plummeted to a low of -0.17 on May 1, when Bitcoin was trading around $58,000, before rising by around 27% to nearly $72,000 in June.

Expert: BTC will be very good in the next six months to a year

Lawant said this, which highlights the significant influence of the US market in determining the formation of Bitcoin prices: At least in the near future, the Coinbase Premium Index has become a reliable, deterministic and sometimes even leading indicator of overall market trends.

Lawant further said that given that several upcoming catalysts are US-centric - ETF fund flows, interest rate cut expectations and the US presidential election, he expects this trend to continue: there are signs that the next 6 to 12 The month will be wonderful, but it may also be unstable.

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