Coinbase Premium Index Drops to Lowest Level in Six Months
The Bitcoin Coinbase Premium Index, indicating US retail demand, has reached its lowest point in six months, reflecting investor caution ahead of the US Consumer Price Index (CPI) release.
Coinbase Premium Turns Negative
- The index fell to -0.0254% on Tuesday, coinciding with Bitcoin's brief drop to $95,902.
- This is the first negative reading since the index crashed on August 3.
- The Coinbase Premium measures the price difference between Bitcoin on Coinbase and other exchanges, signaling institutional demand.
- A negative value suggests selling pressure from US institutional investors.
- Bitcoin's recovery to $96,000 was driven by international investors; it is currently priced at $96,330, down 1.9% in 24 hours.
- The market cap is $1.9 trillion with a trading volume increase of over 9% to $36.79 billion.
Impact of US CPI Data on Bitcoin Price
- The CPI is a key inflation indicator; a higher CPI signals increased inflation.
- The December 2024 report showed inflation at 2.9% YoY, with predictions for Wednesday's report estimating a decrease to 2.85%.
- A lower CPI could support expectations for Federal Reserve interest rate cuts, potentially boosting Bitcoin demand.
- A higher-than-expected CPI may strengthen the US dollar, reducing Bitcoin demand.
- Current inflation indicators suggest a complicated path for the Fed regarding rate cuts, which could limit any potential Bitcoin rally.