Coinbase index foreshadowed Bitcoin drop at $66K.

Samiksha

Analysts revealed that the Coinbase Bitcoin Premium Index issued a bearish signal prior to the Bitcoin crash.

According to CryptoQuant's analysis, as Bitcoin's price fell by over 7% to $66,000 on Friday and further hours before Sunday's plunge, the Coinbase Premium Index dropped to below 0.05.

Coinbase Premium Blinking Bear Signal

The Coinbase Premium Index is an indicator representing the percentage difference between the Binance (Tether) USD to USD price and the Coinbase Pro USD price. The decline in this index indicates that professional traders are less optimistic than retail traders, as a significant portion of Coinbase's trading volume comes from early investors.

The negative trend of the Coinbase Premium Index typically signals short-term pullbacks in bull markets, amplifying the likelihood of recent corrections and eastward movements. It also suggests that BTC is unlikely to experience an immediate price surge.

The premium dropping below 0.05 highlights a reduction in buying pressure from U.S. investors. The subsequent price adjustment was deemed necessary by analysts. On-chain analysis platforms like CryptoQuant and Bitfinex also warned of the risk of price corrections for BTC above $73,000.

Necessary Correction

CryptoPotato reported that popular technical analyst CryptoCon stated a 20% price correction is necessary for BTC before it reaches new levels. With warning signals indicating a potential downturn for BTC, the asset might lose around 6% more in the coming days.

Based on historical data from the Directional Movement Index (DMI), CryptoCon anticipates BTC to reach cycle peaks in the next three to nine months after the current cooling-off period. The index measures the strength and direction of assets while reducing potential false signals.

Meanwhile, Bitcoin's crash on Friday liquidated over 190,000 traders, totaling approximately $700 million. The largest damaged position on the cryptocurrency exchange OKX exceeded $13 million. With unrealized profit margins of short-term holders reaching record highs during BTC's surge above $73,000, this leading digital asset may require some time to recover.

Ritu13

That price is quite high as well.