Bitcoin (BTC) has shown great momentum so far this market cycle, but recent insights suggest liquidity sources other than Coinbase may be driving the trend.
CryptoQuant analyst Mignole provided an in-depth analysis of the Bitcoin market in particular, highlighting the role of major exchanges such as Coinbase and Binance in the ongoing bullish cycle.
Liquidity dynamics and the changing role of exchanges
In a recent post on the CryptoQuant QuickTake platform titled “Coinbase’s dominance remains low,” Mignole considered the trajectory of Coinbase’s influence on Bitcoin price movements.
The analyst emphasized that Coinbase played a key role in the early stages of Bitcoin's rise this year, but its dominance has since declined. This shift shows that Binance is emerging as a key player in sustaining bullish momentum, and that liquidity is more widely distributed across the market.
Coinbase's dominance remains low
“However, just before the September-October rally, Coinbase's dominance actually declined and has not increased significantly to this day (red box).” – by @mignoletkr
For more information https://t.co/nmnPGuz3WK pic.twitter.com/mBSImH8MwD
— CryptoQuant.com (@cryptoquant_com) December 11, 2024
Mignolet's analysis points to the key observation that Coinbase's dominance in spot trading has diminished significantly during the second phase of Bitcoin's current rally.
His analysis revealed that a Bitcoin exchange-traded fund (ETF) was approved earlier this year, spurring a surge in trading activity on Coinbase.
This influx of liquidity helped push Bitcoin prices higher and disrupt traditional halving expectations. But as the rally progressed, Coinbase's influence waned.
The analyst emphasized that while Coinbase remains an important source of liquidity, Binance has a more important role in the current market stage. Mignolet writes:
Again, I'm not saying that Coinbase's liquidity is unimportant or insignificant. That's very important. What I would like to emphasize is that there are even more important sources of liquidity. = Binance
Notably, Binance's growing dominance suggests that liquidity is flowing in from a wider range of participants, contributing to a strong market structure with some degree of decentralization.
This redistribution may indicate broader institutional and retail interest in Bitcoin as traders and investors diversify their platforms.
Bitcoin rebounds sharply
After a multi-day correction below the $95,000 price mark, Bitcoin is currently making a sudden rebound.
Notably, as of this writing, the asset has regained the $100,000 price mark with a current trading price of $100,625, representing a 4% increase in price.
This increase in Bitcoin prices has caused the price to fall by just 3.6% from its all-time high of over $103,000 set earlier this month.
Featured images created with DALL-E, TradingView charts
