Data shows the Bitcoin Coinbase premium index has shot up recently. Here’s what this may mean for the price of the cryptocurrency.

As pointed out by an analyst in a CryptoQuant post, the volatility could increase for the coin in the near future. The “Coinbase premium index” is an indicator that measures the difference between the Bitcoin price listed on Coinbase Pro (USD pair) and that listed on Binance (USDT pair).

Since Coinbase is an exchange that’s popularly used by investors based in the US (especially large institutions), the premium index can provide hints about how the current buying behavior of American investors differs from that of Binance’s userbase (which is more global-oriented).

When the index has a value greater than zero, it means the price listed on Coinbase is higher than that on Binance right now. Such a trend suggests that US investors are putting more buying pressure on the market than global investors currently as they are willing to pay higher.

On the other hand, the indicator having a negative value implies that American investors are selling more than the global holders at the moment (or alternatively, they are just buying to a lesser degree).

Now, here is a chart that shows the trend in the 30-day simple moving average (SMA) Bitcoin Coinbase premium index over the last few days:

As shown in the above graph, the 30-day SMA Bitcoin Coinbase premium had plunged into negative values when the price of the cryptocurrency had seen a sharp decline below $22,000 a few days back. This means that US investors took part in a bit higher degree of selling around this drawdown.

In the days that followed the price plummet, however, the indicator’s value maintained itself around slightly positive values, implying that American investors were buying the dip a bit more heavily than global users.

In the past day, though, the metric has seen a very sharp spike, suggesting that the price listed on Coinbase is noticeably higher than on Binance currently. It would appear that US holders have ramped up their buying today, likely because they think that the rally isn’t over yet and see the current dip as a major buying opportunity.

In the past, there have been some price increases fueled by purchases from American investors, so it’s possible that Bitcoin could see a rise in the coming days from this heavily positive premium index.

Another possibility that shouldn’t be discounted, however, is that this sharp increase might as well be a sign that global investors have started to sell more heavily instead, which, if true, could lead to further downside for the asset.

At the time of writing, Bitcoin is trading around $21,600, down 5% in the last week.

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