Coinbase’s Premium Index Gains ground first time in 2025, market still cautious

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In the year 2025, the Coinbase Premium Index – a significant indicator of American investor opinion – rose above zero, aligning with Bitcoin‘s price reaching an astounding $102,000 on January 7th.

The Coinbase Bitcoin Premium shows the difference between Bitcoin’s trading price on Coinbase versus other significant exchanges. A recent rise in this premium suggests growing interest in Bitcoin from American traders and financial institutions, hinting at an important shift in market trends.

When consumer price index (CPI) rises, it implies that Bitcoin (BTC) is being traded at a higher value on Coinbase, reflecting an increased interest in buying from US investors, especially institutional and ETF participants. Conversely, when the CPI falls, this usually indicates decreased demand or selling pressure among US investors. Since Coinbase is a widely-used trading platform in the US, its pricing patterns are frequently regarded as a precursor for global market sentiment.

2025 marks the first time that Bitcoin’s Coinbase Premium Index has shown a positive trend, indicating that U.S. investors are now leaning towards a surge in buying pressure rather than selling. – By @burak_kesmeci

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— CryptoQuant.com (@cryptoquant_com) January 6, 2025

Understanding why CPI becomes positive at its onset is crucial for both timing and broader consequences. At 18:04 local time, a significant withdrawal of 4,012 BTC from Coinbase was observed, suggesting that institutional investors are transferring Bitcoin to their personal wallets. This action is often interpreted as a long-term ‘HODL’ strategy, indicating that these investors have faith in the future price trends of the asset. Analyst Burak Kesmeci on CryptoQuant highlighted this point.

The surge of Bitcoin’s price over $102,000 mirrors this optimistic viewpoint. The Consumer Price Index (CPI) is often seen as a precursor of U.S. investor tendencies and reinforces the influence the U.S. market has on BTC price fluctuations. Furthermore, additional indicators like open interest and on-chain data, coupled with the CPI showing positive values, point towards a more bullish perspective for Bitcoin in 2025.

In summary, while there are movements happening in the derivatives market, a closer look at overall funding trends suggests a more conservative approach. According to Glassnode, the weekly moving average for perpetual funding rates has dropped to 0.009%, which is just below the neutral threshold of 0.01%. This implies that market participants might be taking a cautious stance.

This shows a drop compared to the mid-December high of 0.026%, suggesting that traders are less eager to pay extra for the opportunity to increase their positions with borrowed funds (leveraged long positions).

☑️ I’ve observed that the weekly moving average of perpetual funding rates, which peaked at 0.026% in mid-December, has since dropped to 0.009%. This is slightly below the neutral rate of 0.01%, indicating a more cautious stance among speculators. It appears they’re not eager to pay premiums for long positions at this time.

— glassnode (@glassnode) January 7, 2025

This careful stance in the derivatives market indicates that although U.S. investors are fueling activity in the regular market, there’s still a lack of enthusiasm for high-risk, leveraged positions. The contrast between rising Consumer Price Index (CPI) and low lending rates reveals a divide in market conduct: while spot markets exhibit optimistic trends, futures markets maintain a more cautious perspective.

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2025-01-07 18:10