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Bitcoin's price fell as a bout of selling buffeted the crypto market, but an even more striking development occurred: the Coinbase Premium surged. CryptoQuant noted this divergence in a recent tweet, stating that "Bitcoin plummets, but Coinbase Premium surges."

The Coinbase Premium is a measure that represents the percentage difference between the Bitcoin prices on Coinbase Pro and Binance. A higher premium suggests increased buying demand from U.S. investors. Furthermore, Coinbase is one of the most popular spot exchanges among U.S. institutional investors.

The Coinbase Premium has recently shown negative values, beginning yesterday, but has recovered dramatically following a significant price decrease. Notably, when the premium is in a negative area, the market tends to recover.

This rebound implies that when panic-selling happens on Binance, which has a higher concentration of small investors, U.S. institutional investors are more likely to engage in aggressive buying behavior.

Crypto market faces sell-off

A slow bleed in crypto escalated on Tuesday, sending practically the entire sector significantly lower. Bitcoin (BTC) dropped to a low of $94,220 on Tuesday as prices tumbled rapidly.

On Dec. 5, Bitcoin reached a record high of $104,000 on Coinbase but has since struggled to stay above the six-figure mark. The total cryptocurrency market has lost over $200 billion in the last 24 hours.

Major tokens and midcaps experienced one of their worst days in recent months, with a steep decrease during the early Tuesday session.

According to CoinGlass data, over $1.6 billion in cryptocurrency positions have been liquidated in the last 24 hours, indicating that leveraged bets are unraveling. Overall market value has fallen by 3.73% in the last 24 hours, reaching $3.47 trillion.

Bitcoin traded at $97,689, down 0.76% in the last 24 hours. Major cryptocurrencies like Ethereum and Dogecoin struggled to gain momentum. The collapse resulted in the liquidation of more than $1.39 billion in longs, or optimistic bets, the largest total since 2021.