Bitcoin (BTC) is currently trading at a discount on Coinbase, a trend that some experts believe could signal a price bottom for the largest cryptocurrency. David Lawant, head of research at FalconX, highlighted that the last time the “Coinbase Premium Index” was this negative, it preceded a significant rally from October 2023 to March 2024.

The Coinbase Premium Index measures the price difference for Bitcoin between Coinbase, a platform heavily utilized by U.S. users and institutional investors, and Binance, the leading exchange by trading volume favored by retail users. Throughout most of May and June, this index has been negative, indicating weak demand and selling pressure from U.S. investors. On Friday, the index dropped to nearly -0.19, its lowest point since the collapse of the crypto exchange FTX in November 2022.

Bitcoin has been trading within a narrow range since reaching all-time highs in March. Investor concerns have been heightened by outflows from U.S.-listed spot BTC exchange-traded funds (ETFs) and the U.S. government’s sales of seized assets through Coinbase. Historically, deeply negative Coinbase Premium readings have often preceded local price bottoms and subsequent significant rallies.

In August 2023, the index’s low came shortly before Bitcoin bottomed around $25,000. The cryptocurrency then traded within a range until October, when it nearly doubled in price by January, driven by anticipation for upcoming U.S. Bitcoin ETFs. Most recently, the Coinbase Premium Index dipped to -0.17 during the market capitulation on May 1, when Bitcoin fell to $56,000. Following this dip, BTC rallied approximately 27% to $72,000 in June before experiencing a decline.

This trend suggests that a significant rally could be on the horizon if the pattern holds true. The negative readings on the Coinbase Premium Index might be an indicator of weak demand from U.S. investors, but they also historically mark the beginning of price recoveries. As such, market watchers are keeping a close eye on this index as a potential signal for the next big move in Bitcoin’s price.