Coinbase Premium Drops Sharply After Late Recovery in April, Pointing to US Whale Activity

Key Takeaways

• Coinbase Bitcoin Premium turns negative again after recovering in May.
• The negative premium is accompanied by selling pressure from US Bitcoin miners such as Riot.
• The Bitcoin premium data is often a market sentiment indicator, suggesting a gradual bearish sentiment.

Coinbase Bitcoin Premium has dropped sharply over the past few days, despite recovering towards the end of April after the BTC price significantly recovered from its April lows below $75,000.

The Coinbase Bitcoin Premium measures the percentage difference between the price of Bitcoin on Coinbase (USD pair) and Binance (USDT trading pair).

U.S. Bitcoin Whales Selling Again

According to CryptoQuant data , the sharp decline in the Coinbase premium indicates increased selling pressure from whales in the United States, suggesting a selling spree from U.S. investors.

The Coinbase premium gap is currently at -5.07%, meaning Bitcoin trades at a lower price on Coinbase than on other international exchanges.

This implies that U.S. whales have started to offload Bitcoin ahead of the upcoming FOMC meeting, at which the Federal Reserve is expected to keep interest rates unchanged.

The negative Coinbase premium coincides with major Bitcoin mining firms such as Riot continuously selling their mined Bitcoin. Riot reported that they sold 475 BTC in April for $38.8 million.

Earlier today, the firm moved another $6.7 million worth of BTC to NYDIG. 

Bearish Sentiment Creeps in Again

The crypto market has just recovered from a bloody February, March, and most of April, before price recovery began towards the end of April. 

Market sentiments turned bullish, and Bitcoin exchange-traded funds saw two consecutive weeks of net inflows after nearly one and a half months of outflows. However, the recent whale selling spree has tilted market sentiments towards bearish again.

A negative premium indicates bearish sentiment from U.S. traders, and a persistent negative Coinbase premium indicates potential price weakness ahead. If the premium gap remains negative, short-term downside risk may increase.

According to a crypto market analyst, Axel , current market sentiments are driven by short-term holders with an average holding duration of 1-3 months. A significant portion of these Bitcoin traders are heavily invested in ETFs.

In the current bull cycle, Net Unrealized Profit and Loss (NUPL) has regularly risen to the >40% range, after which traders begin to take profits, which creates selling pressure in the spot market.

If the NUPL exceeds 40%, selling pressure from these traders will remain minimal. Thus, the data suggests that large whales dominate the current market sentiments.