Coinbase Premium Dips to Lowest Level, Signaling Increased Institutional Selling Pressure

A key indicator of institutional crypto market participation, the Coinbase premium has fallen deeper into negative territory, indicating increased selling pressure from institutions.

The Coinbase premium has been mostly negative since late April, but it has fallen much faster over the past seven days and recorded its lowest level this month at -0.0983% on May 21.

“Institutional selling pressure has intensified recently,” CryptoQuant analyst Darkfost said on Thursday.

“This suggests that the population of institutional and professional investors trading on Coinbase Advanced is selling more aggressively than investors trading on Binance.”

Institutional investors are also shying away from store-of-value assets such as gold, which is down 5.8% over the past month, favoring stocks with the S&P500 and Dow Jones indexes trending up since the beginning of April.

Analyst Axel Adler said the results suggest “zero confirmation from US spot demand.”

The Coinbase premium is a measure of the difference between Bitcoin prices on Coinbase, which is used more by US institutions, and Binance, favored more by retail investors.

Coinbase premium falls to its lowest level this month. Source: Coinglass

Institutions are repositioning

“The uncertainty surrounding the current macro environment appears to be pushing institutions toward hedging strategies while waiting for greater clarity,” Darkfost said.

LVRG research director Nick Ruck told Cointelegraph the decline of the Coinbase premium could also reflect the “emergence of net selling pressure from larger holders,” and suggest institutions are taking profits or repositioning, which “could weigh on near-term price momentum across major crypto assets.”

Bitcoin ETF outflows accelerate, derivatives decline

Another signal of institutional selling pressure is US spot Bitcoin exchange-traded funds, which have seen four trading days of outflows totaling $1.3 billion since May 14, according to CoinGlass.

Related: Bitcoin longs soar despite weak US macroeconomic data: Is $82K BTC next?

Derivatives demand also appears to be weakening, with open interest, or the value of open Bitcoin futures or perpetual contracts, dropping by around $1.5 billion this week, “clearing much of the leverage built up during Bitcoin’s move toward $82,000,” said Bitfinex.

“With short-side fuel exhausted and long positioning reset lower, the next major move likely depends on spot demand,” it added.

Bitcoin has declined 4.5% over the past week, hitting a monthly low just above $76,000 on Tuesday. It was flat on the day at $77,621 at the time of writing, down 38% from its October peak.