Coinbase premium just dropped a huge signal for Bitcoin’s price to hit $130,000

Bitcoin price premium in the US goes green.
The price is down 7% from its all-time high.
Traders are expecting a September rate cut.

US investors are quietly piling into Bitcoin after a wobble that saw its price decline 4% in the last week amid a $9 billion selloff and late-month geopolitical jitters.

The bubbling buying spree is visible in the Coinbase Bitcoin premium gap on CryptoQuant, a market data platform.

The metric tracks the difference in the Bitcoin price on Coinbase Pro and other exchanges, including Binance. It has flipped positive, signalling that US demand is rebounding, further fuelling analysts’ bullishness on Bitcoin’s long-term price prospects.

“Bitcoin to trade between $130,000 and $150,000 by year-end, assuming continued [exchange-traded fund] inflows and a stable macro environment, [but] much will hinge on upcoming Federal Reserve decisions, particularly the anticipated rate cut in September,” analysts at TeraHash, a Bitcoin yield protocol, told DL News.

An interest rate slash by the Federal Reserve is seen as rocket fuel for Bitcoin because lower interest rate environments favour assets like crypto and stocks.

And traders are already pricing in an 88% chance of a September rate cut, according to the CME’s FedWatch tool.

James Butterfill, head of research at CoinShares, a crypto investment firm, said he expects the Federal Reserve to pivot sharply dovish, a policy shift that favours growth over inflation control, usually by reducing interest rates for cheaper borrowing.

“The Fed is on the back foot and overly concerned with transitory inflation issues and is likely to do a knee-jerk rate cut; it’s debatable as to whether this will be September or later, though,” Butterfill said.

To be sure, some analysts say Bitcoin has lost some momentum in the short term following its recent price slump. Analysts at Bitfinex, a crypto exchange, say they expect Bitcoin to consolidate between $114,000 and $116,000 unless something triggers new market moves.

Bitcoin traded just above $114,000 on Tuesday, down 7% from its all-time high of $122,838 achieved on July 14.