Coinbase Premium Hits Four-Week Low Amid Policy Headwinds
Bitcoin's Coinbase premium has dropped to its lowest level in four weeks, hinting at weakening US demand. The premium measures the difference between Bitcoin's dollar price on Coinbase and its USDT price on Binance. CryptoQuant's Coinbase Premium Index tracks this gap as a percentage of price. On Tuesday, it hit around -0.07%, roughly a $50 margin on a $75,900 Bitcoin.
The discount has deepened since the Clarity Act failed to pass on Tuesday. This setback reverses the trend seen in late August and early September when the premium turned positive for the first time in months as Bitcoin climbed towards $80,000. Bitcoin has since retreated to around $75,000.
Tightening monetary policy is another headwind. The Federal Reserve will announce its decision later on Wednesday, with markets expecting a 25-basis-point increase that would lift the federal funds target range to 3.75% to 4%. This move risks compounding pressure on growth by raising borrowing costs and making debt financing more expensive for companies.
Elevated energy prices, due to Middle East tensions, threaten to sustain inflation with Brent crude around $108 a barrel and WTI near $104. Expensive oil also contributes to higher yields, which have climbed above 5%. Together, these factors create a challenging environment for Bitcoin and other risk assets.