October 22, 2024
See When the Smart Money Starts to Run with This Easy Indicator
Dear Subscriber,
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| By Bruce Ng |
Each day brings us closer to Bitcoin’s next big breakout. Not to mention the broad market bull run that should follow.
How close is hard to say exactly. So, I’ve been revealing the indicators I watch to see how much longer we need to wait.
This way, you can see — and prepare — for yourself.
I’ve already shared two of my top metrics: Bitcoin’s spot CVD and impulsive price action.
That leaves my third indicator for last. And it is the easiest one to understand.
It’s the Coinbase premium. This index tracks the difference between the spot price of Bitcoin on Coinbase Pro and the aggregate spot price of Bitcoin on other exchanges.
You can see in the chart below just how effective it is:
Top: BTC/USDT.
Bottom: Coinbase premium in USD.
Click here to see full-sized image.
The top of this chart tracks Bitcoin’s weekly price. The bottom tracks the Coinbase premium. Focus on the correlation between the two, and you can see:
- BTC’s price goes up when the premium is positive (green)
- BTC’s price goes down when the premium is negative (red)
You can see, the premium is negative right now. And it was negative as BTC reached above $69,000 on Sunday.
BTC’s price action over the past 7 days.
Source: CoinGecko.
Click here to see full-sized image.
Sure enough, BTC did not have the support needed to cross $70,000 just yet and has since retreated.
Why It Works
Coinbase is the de facto on-ramp for institutional investors and high net worth individuals, particularly from the U.S., to purchase BTC.
That means it is a useful way to snapshot what the smart money is doing.
In short:
- A positive premium indicates buying pressure from large U.S. entities
- A negative premium indicates selling pressure from large U.S. entities
It’s really as simple as that!
The current negative status of the Coinbase premium tells me that the big money isn’t ready to hop in.
But you can see the strength of the red spikes down is shrinking. Selling pressure is drying up.
This “almost there” message is what we got loud and clear from both our other indicators.
Bitcoin’s spot CVD is still trading sideways — with a slight upward curve. And while we can see the beginnings of an impulsive price action, we’re not there yet.
That confirms to me that we’re close. And getting ever closer to that rally.
We still have some time to kill before then, however. All three indicators must flash their green “go” signals in tandem for us to be confident the bull is about to start.
That means we’ll need to see:
- Spot buying pressure via the spot CVS
- Impulsive moves to indicate higher highs and higher lowers and confirm a bullish market structure
- Coinbase premium showing positive as a measure of institutional/large entity demand
Once they do, and Bitcoin can cross and claim the $70,000 level with confidence, then I’ll consider the bull market back on track!
I encourage you to use this small time before then to prepare. After all, once things start moving, it may be too late to act.
As you know, there’s so much more to investing in crypto than throwing your money at a project and hoping for the best.
To make the most of this bull market, you need to have a strategy for what to target … and when.
That’s why my colleague Juan Villaverde is hosting an urgent event this coming Tuesday, Oct. 29 at 2 p.m. Eastern.
His prized Crypto Timing Model can lead you toward the right cryptos to buy ... and WHEN to buy them. He’ll explain how it works and which three cryptos are at the top of his watchlist right now.
It’s free to attend. Just be sure to save your seat.
And after, be sure to check out my next Weiss Crypto Daily update. I’ll show you how you can set up the three indicators I’ve shared on Velo Data so you can track them in one place.
Best,
Dr. Bruce Ng
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