A negative premium means that the accumulation will last a little longer, which means that $50,000 in support may have to wait too.
Bitcoin (BTC) has already hit $50,000 on some exchanges, but it needs to get whales on its side to turn it to definitive support, data suggest.
In a tweet on Feb. 16, Ki Young Ju, CEO of CryptoQuant’s on-line analytics service, highlighted the so-called “Coinbase premium” as one of the final obstacles for BTC/USD.
Negative premium slows upward grind
On Tuesday, there was a strong fight inside Bitcoin trading, as $50,000 remained de facto out of control for the bulls.
Analyzing the premium that pits the Coinbase BTC/USD price against the Binance BTC/USDT pair, Ki argued that the higher levels will remain impossible until neutralised.
Currently, the premium is negative, which means that it is easier to purchase Bitcoin on Coinbase. As a result, traders, and especially whales, will continue to accumulate. Only after the balance stabilises will the momentum seem to be more compelling to $50,000.
“This $50k battle is about Coinbase whales(USD) vs. Stablecoin whales(USDT),” Ki said.
“Negative Coinbase premium, but plentiful stablecoins in exchanges. Negative premium should be cooled down to get another leg up.”
Exchange stablecoin balances, which have hit new all-time highs in recent days, point to a desire to exchange for other currencies. The largest stablecoin Tether (USDT) has meanwhile intensified its “minting” in recent months, with USDT’s market cap now close to $33 billion.
At the time of publishing, however, whales were still lined up to sell at and above $50,000. A look at Binance’s orderbook data shows incremental order sales occuring every $1,000 up to $55,000.
No “FUD” over GBTC premium
Meanwhile, one analyst warned against misinterpreting a drop in another premium, this time in institutional investor circles.
After the beginning of 2021, the Grayscale Bitcoin premium, which is the price charged by investors to the Grayscale Bitcoin Trust (GBTC), has fallen. Far from suggesting decreased interest in Bitcoin, a more attractive buy-in incentive is the result of more shares being available.
“A large $GBTC premium is a sign of strong demand for bitcoin. Institutional inflows into $GBTC have been one of the largest drivers of this bull market, so everyone’s eyes are on that premium. And now that the premium has collapsed, this has had many market participants worried,” said macro analyst Alex Krueger on Monday.
“The premium has not collapsed due to faltering demand for $GBTC (in the secondary market), but rather due to increasing issuance — issuance skyrocketed in the last few months, helping reduce the premium with a lag. The $GBTC premium trade simply got too crowded.”
As Cointelegraph posted, Grayscale continuously increased its BTC holdings, and also restarted purchases for Ether (ETH) in February after almost two months of hiatus. As of Feb. 12, Bitcoin had assets under control worth $31.1 billion.
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