Coinbase Premium Hits Monthly Low in 7 Days... Did US Retail Investors Dump Everything?

▲ Bitcoin (BTC), Cryptocurrency Decline/AI Generated Image

An analysis suggests that institutional selling pressure has increased as the Coinbase Premium, a key indicator for gauging institutional investor participation in the cryptocurrency market, has fallen to its monthly lowest level.

Cointelegraph reported on May 22 (local time) that the Coinbase Premium dropped deeper into negative territory, indicating an expansion of selling pressure from institutional investors. The Coinbase Premium has largely remained negative since late April, and the rate of decline accelerated over the past 7 days, reaching a monthly low of -0.0983% on May 21.

CryptoQuant analyst Darkfost stated, "Institutional selling pressure has intensified recently." He explained that institutional and professional investors trading on Coinbase Advanced are selling more aggressively than investors trading on Binance.

The Coinbase Premium is an indicator that measures the price difference of Bitcoin (BTC) between Coinbase, primarily used by US institutional investors, and Binance, which has a large proportion of retail investors. Analyst Axel Adler assessed that these results suggest "a complete lack of confirmation of US spot demand."

Darkfost said that the current macroeconomic uncertainty appears to be driving institutional investors toward hedging strategies until greater clarity emerges. Nick Ruck, Director of LVRG Research, told Cointelegraph that the drop in Coinbase Premium could reflect the emergence of net selling pressure from large holders and may be a signal that institutions are taking profits or rebalancing positions. He added that this trend could put downward pressure on the short-term price movements of major cryptocurrencies.

Another sign of institutional selling pressure was the outflow of funds from US Bitcoin spot ETFs. According to CoinGlass data, a total of $1.3 billion flowed out of US Bitcoin spot ETFs over four trading days since May 14. Demand for derivatives also showed a weakening trend, with Bitfinex reporting that open interest in Bitcoin futures and perpetual contracts decreased by approximately $1.5 billion this week.

Bitfinex explained that a significant portion of the leverage accumulated as Bitcoin moved towards $82,000 has been cleared. It added, "With short-position fuel exhausted and long positions also reduced, the next major move is likely to depend on spot demand." Bitcoin fell 4.5% over the past week and dropped to a monthly low just above $76,000 on Tuesday.

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