The Coinbase premium index — a metric used to gauge Bitcoin retail demand in the United States — fell to its lowest level in 12 months as 2024 drew to a close, with an analyst warning it could pose a challenge to short-term price recovery.
“The increasing seller pressure in the US market has significantly impacted the Coinbase Premium Index, dragging it to new lows,” CryptoQuant contributor Burakkesmeci said in a Dec. 31 analyst note.
Low-liquidity market
The Coinbase premium can be used to gauge Bitcoin (BTC) demand from US retail investors. A rising value indicates more buying pressure and a negative value hints at selling pressure.
On Dec. 31, it fell to its lowest point of - 0.23. On the same day, Bitcoin briefly dropped to $91,479, its lowest point since Nov. 27. Burakkesmeci attributed this to a “low-liquidity market at year-end.”
The last time the premium reached this level was in January 2024, around the same time spot Bitcoin exchange-traded funds (ETFs) launched in the US.
It came close to this range again in late October, just before the US elections, hitting -0.20 when Bitcoin was trading around $68,165, according to CoinMarketCap.
Bitcoin: Coinbase Premium Index chart. Source: CryptoQuant
Burakkesmeci said this could pose challenges for Bitcoin’s short-term price recovery unless there is a “shift in macroeconomic conditions” or a surge in interest from institutional or retail buyers.
A key macroeconomic event the crypto industry is closely watching is US President-elect Donald Trump’s inauguration on Jan. 20.
Some analysts say Bitcoin’s rally will eventually continue post-inauguration after an initial stall. According to Ryan Lee, chief analyst at Bitget Research, the BTC price may correct by as much as 30% before resuming its bullish run.
Long-term holders in significant profits
Meanwhile, Bitcoin long-term holders — those who have held their Bitcoin for over 155 days — are sitting on significant profits.
This could increase the risk of further sell-offs as investors may look to cash out and take profits into the new year.
The long-term holder’s realized price is $24,298, representing about a 290% profit margin if they were to sell at the current price at publication, $94,820, according to Bitbo data.
Related: Bitcoin analysts eye recovery to $105K, but ETF flows stagnate
However, the average cost-basis for short-term holders — those holding Bitcoin for less than 155 days — is significantly higher.
The short-term holder’s realized price stands at $86,753, reflecting a 9.29% profit if they were to sell at the current price at the time of publication.
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This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.