Coinbase Premium Index Signals Bitcoin (BTC) Recovery May Be Entering a New Phase

Bitcoin appears to be entering a period of consolidation following a brief burst of upward momentum earlier this week.

Bitcoin appears to be entering a period of consolidation following a brief burst of upward momentum earlier this week. After reaching nearly $86,000, the cryptocurrency has retraced slightly and is currently trading around $84,650.

As the dust settles on Bitcoin's recent price action, analysts are delving deeper into on-chain data to assess whether renewed buying pressure could support a more sustained recovery.

One of those analysts, CryptoQuant contributor Avocado Onchain, recently shared his insights in a post titled "Coinbase Premium Signals Signs of Recovery Amid Market Turmoil, While Korea Premium Index Remains Lagging."

Avocado noted that escalating trade tensions between the US and China have added volatility to global markets, including Bitcoin.

Bitcoin price action today | Source: BTC/USD on TradingView.com

After undergoing a more than 30% correction and falling below the $60,000 support, Bitcoin has managed to stabilize and rebound, trading above the key Fib support level of $70,000.

Bitcoin Coinbase Premium Tightens While Korea Lags

According to Avocado, the Coinbase Premium, which measures the price difference between Bitcoin on Coinbase and other major exchanges, has begun to show a constructive pattern.

The analyst wrote: "Since the beginning of the prolonged correction in March 2024, the Coinbase Premium has displayed a pattern of compressing highs and lows. This was followed by a sharp rise in buying activity on Coinbase, causing the premium to spike and Bitcoin's price to surge."

Currently, the premium is once again narrowing into a triangle pattern of lower highs and higher lows. Avocado interprets this as a potential precursor to renewed upside momentum in the market, similar to past cycles.

"This pattern suggests that institutional and US-based demand is recovering, even as overall market conditions remain unstable," he added.

In contrast, the Korea Premium Index, which tracks the price spread between Korean exchanges and global averages, has shown a weaker profile. Avocado explained that this index trended lower throughout 2024 and only began to rise after Bitcoin had already started to rally, indicating delayed participation from Korean retail investors.

This divergence between the two metrics highlights a shift in regional market leadership, with US investors currently taking a more proactive role.

Highlighting the Role of Regional Indicators in Market Recovery

In his analysis, Avocado concluded that although macroeconomic uncertainty continues to influence short-term movements, indicators like the Coinbase Premium are showing signs of healthy demand. He pointed to the ongoing formation of a support base near $84,000 as a positive development in market structure.

"Although overall market conditions remain unstable, the upward trend in the Coinbase Premium's lows indicates healthy demand," he noted. "This bodes well for a potentially strong mid- to long-term recovery in Bitcoin's price trajectory."