Bitcoin has slipped under the $20,000 level today for the first time in two months. Here’s why this plunge may have taken place, according to on-chain data.

Bitcoin Price Dropped With Coinbase Premium Turning Negative

As pointed out by an analyst in a CryptoQuant post, the U.S. government’s recent movement may have played a role in the latest decline in BTC’s price. There are a couple of relevant indicators here: the Coinbase Premium and the Spent Output Age Bands (SOAB).

The “Coinbase Premium” measures the difference between the Bitcoin price listed on the cryptocurrency exchange Coinbase and that listed on Binance. Coinbase is an exchange that’s popularly used by U.S.-based investors (especially large institutions), while Binance has a more global-oriented audience.

Due to this reason, the Coinbase Premium can provide hints about whether American holders are buying (or selling) more or less than global investors right now.

When the value of the metric is positive, it means the price listed on Coinbase is greater than that on Binance currently, and hence the U.S.-based users have been putting on higher buying pressure than the global investors (or alternatively, they have just been selling less heavily).

On the other hand, negative values of the metric suggest that U.S. participants might be engaging in a higher amount of selling than the world user base at the moment.

Now, here is a chart that shows how the Bitcoin Coinbase Premium has changed over the past week:

Bitcoin Coinbase Premium Index

As displayed in the above graph, the Bitcoin Coinbase Premium has turned negative recently. This means that U.S. investors may have been putting some extraordinary selling pressure on the cryptocurrency during this period.

Interestingly, the price of the coin has declined while the premium has become negative, which may suggest that U.S. participants may have had more of a hand in this latest plunge.

The chart also contains data for the other indicator of interest here, the “SOAB,” which tells us which age bands (or groups) in the market have been moving their coins recently.

Curiously, the 6m-12m age band, which includes all Bitcoin investors that have been holding onto their coins for at least 6 months and at most 12 months ago, has shown a large movement just a few days ago.

As for the source of these aged coins, the quant explains, “the transaction is linked to bitcoins seized by the U.S. government because they are related to Silkroad.”

The timing of this large Bitcoin transaction and the selling pressure rising on Coinbase is interesting and could suggest that there may be a link between the two.

“It’s difficult to say what impact this transaction had on the price drop because we can’t see what’s happening on the exchange,” notes the analyst. “But everything suggests that it caused extra selling pressure.”

BTC Price

At the time of writing, Bitcoin is trading around $19,800, down 11% in the last week.

Bitcoin Price Chart