Two of the largest cryptocurrency exchanges in the world – Binance and Coinbase – appear to be duking it out over cryptocurrency.
The Coinbase Premium Has Got Some People Worried
Binance is based in Asia, while Coinbase is in North America. The two territories are arguably fighting over the status of bitcoin and where it goes in the future, and analysts are warning about which platform to work with depending on what the asset’s price will be.
Industry heads are particularly concerned over what they call the “Coinbase premium,” which is the price gap of bitcoin between both Binance and Coinbase. Should this premium be high in the coming weeks, several of these experts are telling traders to avoid the North American exchange.
Ki Young Ju – chief executive of bitcoin and crypto data firm Crypto Quant – says in a recent interview:
A significantly higher Coinbase premium is a bullish signal. It indicates Coinbase whales who might be institutional investors or high net-worth individuals are buying bitcoin… The Coinbase premium varies from time to time, but if there’s too much premium, pro-traders should avoid using Coinbase, I would say.
The idea is that when the price is high and many top individuals are buying the currency, they are likely to engage in selloffs when BTC surges further, which could mean that the asset will take a nasty turn into bearish territory. Anyone who saw this premium and decided to follow in these traders’ footsteps are likely to take a huge hit to their wealth and assets.
The Coinbase premium has been around for a long time, but while it’s being depicted in a poor light, there have been individuals in the past that have utilized the premium for their own gains and experienced boosts to their wealth as a result.
Crypto trader and economist Alex Kruger recently stated:
Look at the Coinbase premium between October 2020 and November 2020, and in May 2019, you’ll see how strong bull markets are at first resisted by derivatives players before they all flip and join the ‘up only’ party.
The Public Offering Will Help the Space
According to many analysts, the strength of the crypto market is about to shoot through the roof thanks in part to action taken by Coinbase. The trading company has recently filed the necessary paperwork for a public offering. This will be the first offering of its kind, and many believe that the legitimacy and mainstream status that the crypto space has long sought is right around the corner.
In addition, it has been revealed in recent weeks that while the company is primarily known for enabling the trades of others, it also engages in this activity as well, while its CEO Brian Armstrong says it would be the best thing for the industry for Satoshi Nakamoto – the alleged creator of BTC – to remain hidden.