Wall Street Liquidity Radar: U.S. bitcoin discount narrows as buying weakness eases

U.S. bitcoin buying sentiment remains weak, but the discount has narrowed sharply. Trading volume through an institutional venue also increased substantially.

U.S. spot prices remained below overseas levels for a sixth straight day, though the gap contracted noticeably. The rise in institutional trading suggests further deterioration in demand has been limited.

The Coinbase premium stood at -0.0302% on Oct. 15. It moved from -0.0935% on Oct. 10 to -0.1132% on Oct. 11 and -0.1313% on Oct. 12, recovered to -0.0806% on Oct. 13, then fell to -0.1417% on Oct. 14 before rebounding.

A negative premium means bitcoin is trading more cheaply on Coinbase than in overseas markets. While the reading remained below zero for six consecutive days, the smaller discount points to easing weakness in U.S. buying sentiment.

Bitcoin: Coinbase premium (%)

Coinbase Prime volume reached 6,536.65 BTC on Oct. 14, up 25.9% from 5,191.47 BTC the previous day. Its 24-hour dollar volume was about $384.12 million.

Trading through the institutional venue was considerably more active than a day earlier, indicating stronger institutional participation.

Leveraged funds held 5,731 long contracts and 12,583 short contracts in CME bitcoin futures as of Oct. 6, according to the CFTC's weekly disclosure. Positioning therefore remained tilted toward the downside.

The VIX, a gauge of U.S. equity-market anxiety, rose to 17.35 on Oct. 15 from 16.87 the previous day, an increase of 0.48, or 2.8%.

A VIX reading of 20 is generally viewed as the dividing line between calm and stressed conditions. The index remains below that level, but its upward direction presents a less favorable backdrop for crypto assets.

The dollar index fell to 102.05 on Oct. 15 from 102.55 the previous day. The U.S. 10-year Treasury yield stood at 5.21% as of Oct. 13. A weaker dollar supports risk assets, while the elevated yield remains a headwind.

U.S. bitcoin buying weakness appears to be easing, but the data do not yet indicate a clear bullish turn. Whether the Coinbase premium moves above zero and the increase in institutional trading continues will be key points to watch.

Editor's note: Wall Street Liquidity Radar tracks how U.S. investors view bitcoin through four indicators: CME leveraged-fund positioning, the Coinbase premium, the VIX and Coinbase Prime trading volume. Together, they offer a snapshot of short-term market direction and broader investor sentiment.

This article is based on market data and analysis and does not constitute investment advice.