[Wall Street liquidity radar] Bitcoin’s US discount and rising VIX signal caution

Bitcoin traded at a discount in the US while institutional trading volume declined, pointing to cautious demand. Rising stock-market volatility added to the subdued backdrop for risk assets.

The signals offered limited evidence of stronger US buying interest. The latest spot-price discount persisted even as the daily premium series showed the gap narrowing.

On October 23, the latest Coinbase premium reading was -0.15%. The daily series recorded -0.12% on October 19, -0.11% on October 20, -0.08% on October 21 and -0.13% on October 22, before narrowing to -0.07% on October 23. The latest reading therefore showed a wider discount than the October 23 daily-series observation.

The premium compares Bitcoin prices on Coinbase and Binance. A positive reading indicates a higher US price; a negative reading indicates a discount. The consistently negative readings suggest relatively weaker US buying pressure, although the daily series and latest snapshot give different signals about the discount’s direction.

Bitcoin: Coinbase premium (%)

Coinbase Prime, an institutional trading venue, recorded 7,296.83 BTC in volume on October 22, down from 7,679.40 BTC on October 21. Separately, dollar-denominated trading volume over 24 hours was $386.97 million.

Trading volume measures activity and includes both purchases and sales, so a decline does not establish that funds left the market. Alongside the US spot discount, however, weaker institutional activity offers limited confirmation of a recovery in buying interest.

CFTC disclosures showed CME leveraged funds holding 5,520 long contracts and 11,364 short contracts as of October 13. Shorts outweighed longs, although the weekly positioning data predates the latest spot-market readings.

The VIX rose to 19.60 on October 23 from 19.03 on October 22, an increase of 0.57 points, or 3.00%.

The index reflects expected US equity-market volatility. Its increase signals greater market unease, adding a potential constraint on appetite for risk assets such as Bitcoin.

The dollar index rose to 101.81 on October 23 from 101.61 the previous day, gaining 0.20 points. The US 10-year Treasury yield stood at 5.13% as of October 21. A stronger dollar and elevated yields can weigh on demand for risk assets.

Taken together, the indicators suggest caution in US investor sentiment. The Coinbase discount and lower institutional turnover offered limited support for stronger buying, while rising equity volatility added to the uncertainty.

[Editor’s note] Wall Street liquidity radar examines US Bitcoin sentiment through four indicators: CME leveraged-fund positioning, the Coinbase premium, VIX volatility and Coinbase Prime trading volume. Together, they provide context on futures positioning, relative spot demand, equity-market uncertainty and institutional trading activity.