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Bitcoin prices have already risen this week.
Jack Guez/AFP via Getty Images
The price of Bitcoin has rallied over the past week as investors flock back to beaten-down risk-sensitive assets such as crypto and technology stocks.
Bitcoin
was up 7% in the past 24 hours, changing hands around $23,900 on Wednesday, continuing a rally that has taken it nearly 25% higher in the past week. Some analysts are calling for gains of another 25% in the days ahead.
They’re not the only ones bullish on Bitcoin right now. Data from the cryptocurrency exchange
Coinbase Global
(ticker: COIN) suggests that US investors in particular are hungry for digital assets, a factor that could yield further gains.
“There are some signs that we may have a continuation to the upside, as the Coinbase Premium Gap has increased to positive values over the past week,” Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, wrote in a research note on Tuesday.
Tracked by data firm Crypto Quant, the Coinbase Premium Gap measures the difference between Bitcoin prices listed on Coinbase and those on Binance, the world’s largest crypto exchange. Since Coinbase is most popular in the US, and Binance is an offshore behemoth, the gap can be read as an indicator of how crypto demand among Americans stacks up compared to the rest of the world.
This indicator had been in positive territory for much of the time between September 2020, when the last Bitcoin bull run took off, and May of this year, when the recent selloff accelerated sharply.
Bitcoin rose from $10,000 in September 2020 to a peak near $69,000 in November 2021 before prices slowly eroded over the following months. The price of the token took a nose dive in early May, going from $40,000 to $30,000 before falling into the $20,000 range in mid-June.
Since that time in early May, the Coinbase Premium Gap has been strongly negative, signaling a discount for Bitcoin on Coinbase amid a drying up of US demand for the token. As recently as last week, that discount was $25, but on Tuesday it was $1.50, about the closest to break-even — other than a spike in June — since Bitcoin was at $38,500.
“This could be a sign that American investors are buying Bitcoin more than the rest of the world, since Coinbase is mainly used by American investors,” Sotiriou said. “This could also indicate that institutions are becoming more aggressive buyers, as Coinbase has a larger institutional percentage of users compared to Binance. Institutional buying pressure is always a positive sign for bulls.”
All of this doesn’t erase Bitcoin’s devastating losses in recent months. The biggest digital asset just hit its worst quarter since 2011, the year it hit $1 for the first time. The market cap of the crypto space has collapsed to $1.1 trillion from nearly $3 trillion in November 2021, as fears of a recession, other major pressures and failures in the crypto industry itself have led to a selloff.
Some analysts expect more losses – although prices are on the rise for now.
Write to Jack Denton at [email protected]
