CoinShares: There are signs that Bitcoin sentiment is improving! Coinbase premium index falls to two-year low

1. Bitcoin spot ETF ended seven consecutive days of net outflows on the 25th.
2. Net capital inflows reached $73 million on the 28th, the highest single-day inflow in two weeks.

Digital asset investment product flow

3. According to CoinShares statistics, although the latest week is the third consecutive week of net outflows, the total outflows have shrunk significantly from the US$598 million and US$582 million in the previous two weeks.
4. Has dropped to a net outflow of $30 million in the latest week.

   

   Digital Asset Investment Products - Weekly Fund Flow Changes
   CoinShares: There are signs of improving Bitcoin sentiment
   CoinShares report pointed out that compared with previous weeks, most digital asset issuers have experienced small fund inflows, although they were grayed out However, multi-asset and Bitcoin ETPs led other products with net inflows of US$18 million and US$10 million respectively, and the total outflow of short Bitcoin increased to US$4.2 million, indicating that market sentiment may be changing .
   Other altcoins also saw inflows, notably Solana ($1.6 million) and Litecoin ($1.4 million), but Ethereum saw $61 million in outflows, the largest outflow since August 2022, with outflows over the past two weeks It totaled $119 million, making it the worst-performing asset in terms of net flows so far this year.
   Regionally, the United States saw $43 million in inflows, while Brazil and Australia saw $7.6 million and $3 million respectively. Sentiment was negative in Germany, Hong Kong, Canada and Switzerland, with outflows of $29 million, $23 million, $14 million and $13 million respectively.
   Coinbase Premium Index reaches lowest level since 2022/11
   In addition to fund flow data suggesting a reversal in Bitcoin sentiment, the Coinbase Premium Index fell to nearly -0.19 last Friday, which is the lowest since the FTX crash in November 2022 level.
   David Lawant, head of research at cryptocurrency trading platform FalconX, added that the last time the Coinbase Premium Index had such a negative value was a few months before the sharp rise from October last year to March this year. The negative value echoes the market calmness in August and September last year. Therefore, he asked: "Is it always darkest before dawn?" This indicates that he is speculating that the price of Bitcoin is about to bottom out and may move higher next.
   The Coinbase Premium Index is the difference between the BTC price on Coinbase and the BTC price on other exchanges. This negative data shows weak demand and selling pressure from US investors. One of the reasons may be that investors are worried about the US government selling confiscated assets through Coinbase. , resulting in a discount on Coinbase’s BTC price.
   Historically, when the Coinbase Premium Index has a seriously negative value, it is often close to the bottom of the current price, and BTC then rebounds sharply in the next few months. For example:

In early November 2022, the Coinbase Premium Index fell to -0.33 The rare low level coincided with BTC’s bear market lows below $16,000, before prices surged to nearly $25,000 by February. That’s an increase of more than 50%.

The index low came in August 2023, just weeks before Bitcoin bottomed around $25,000. Bitcoin then rallied from October into January, nearly doubling in price, and hitting another all-time high in March.

Most recently, the metric plummeted to a low of -0.17 on May 1, when Bitcoin was trading around $58,000, before BTC rose by around 27% to nearly $72,000 in June.

1. The impact of Coinbase Premium Index

Lawant said that the Coinbase Premium Index highlights the significant impact of the US market on BTC price formation . The index has become a reliable indicator of overall market trends and even sometimes a leading indicator.

2. Impact of U.S. Catalysts

Lawant expects U.S. catalysts to continue to impact the BTC market, including:

• ETF fund flows
• Interest rate cut expectations
• US Presidential Election

3. Future Outlook

Lawant said these catalysts indicate that the next six to 12 months will be very good for the BTC market, but there may also be volatility.

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