‘Coinbase Premium’ Indicates Whales on Binance May Be Behind Bitcoin’s Rally

Institutions outside the U.S. have turned more bullish, according to trading data.

Oct 1, 2021 at 7:05 p.m. UTC
Updated Oct 1, 2021 at 7:31 p.m. UTC
CoinDesk Insights

Muyao is a reporter on the markets team. She is based in Brooklyn, New York. She owns a marginal amount of bitcoin.

Since U.S. markets opened on Friday, bitcoin’s (BTC) price has risen by nearly 10%. A popular indicator used by bitcoin traders may explain the increase.

The “Coinbase premium,” an indicator showing the gap between Coinbase’s BTC/U.S. dollar (USD) pair and Binance’s BTC/USDT pair involving the tether stablecoin, went negative at 14:45 UTC (10:45 a.m. ET) on Friday, according to South Korea-based on-chain data site CryptoQuant, as bitcoin’s price started surging.

(CryptoQuant)

“What’s obvious is that this buying didn’t come from U.S. investors,” said Ki Young Ju, CEO of crypto trading data firm CryptoQuant. The demand for bitcoin is “likely [from] Chinese or non-U.S. investors.”

While Coinbase is more popular among crypto traders in the U.S. and Europe, Binance, which started in China, is known as one of the most popular exchanges among traders in Asia.

Interestingly, not long after the drop, the Coinbase premium also went positive on CryptoQuant’s site, an indication that some trading bots may have captured the widened gap between Coinbase’s BTC/USD pair and Binance’s BTC/USDT for arbitrage opportunities, said Ju.

It is unclear what has triggered the sudden, huge appetite for bitcoin on Binance. However, according to market analysts, institutional investors, or bitcoin whales – those with large bitcoin holdings – have shown a more bullish view on bitcoin, especially as markets welcome a new quarter on the financial calendar.

The Oct. 1 rally shows that players in traditional finance may be establishing new positions as the quarter begins, said Dan Burke, managing director of institutional sales in Asia-Pacific at BitGo.

“It’s the furthest day away from new disclosures,” Burke added.

Options markets also support a renewed bullish view from institutional investors.

“After four days of consolidation, bitcoin broke out bullishly above trend line resistance at $44,000, trading rapidly up to a high just shy of $48,000,” Patrick Chu, director of institutional sales and trading at crypto over-the-counter (OTC) trading firm Paradigm, told CoinDesk. “Throughout the period of consolidation, we continued to see bullish views being expressed via call spreads from our institutional client base.”

(Paradigm)

Chu noted that calls dominated Paradigm’s volume on Friday, at about 77%, versus the volume of put options. A call option gives the purchase the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. A put option gives the buyer the right to sell. At the moment, strong interest is showing at strikes between $50,000 and $100,000, according to Paradigm.

“There has been quite some bullish bets for topside, especially targeting a move back towards the all-time high before the end of year,” Chu said.


The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Muyao is a reporter on the markets team. She is based in Brooklyn, New York. She owns a marginal amount of bitcoin.

Muyao is a reporter on the markets team. She is based in Brooklyn, New York. She owns a marginal amount of bitcoin.

Trending

1
Breaking Barriers to the Web 3 Creator Economy

The latest innovations in blockchain technology are enabling creators to earn more from their work and achieve an unprecedented level of autonomy.

The latest innovations in blockchain technology are enabling creators to earn more from their work and achieve an unprecedented level of autonomy.

2
How Not to Run a Cryptocurrency Exchange

At Japan's Liquid exchange, recently acquired by FTX, warnings were ignored, breaches unreported and employees berated and cursed at, insiders say.

At Japan's Liquid exchange, recently acquired by FTX, warnings were ignored, breaches unreported and employees berated and cursed at, insiders say.

3
Morgan Stanley Warns NFTs Next to Watch After UST Collapse, Bukele Announces Mega Banks Meeting in El Salvador

The most valuable crypto stories for Monday, May 16, 2022.

The most valuable crypto stories for Monday, May 16, 2022.

4
First Mover Asia: Metaverse ETFs Are Underperforming Gaming ETFs; Cryptos Return to the Red

Public interest continues to grow about the metaverse, but not as much in metaverse ETFs. Does crypto belong in everything?

Public interest continues to grow about the metaverse, but not as much in metaverse ETFs. Does crypto belong in everything?