It compares the price of the Coinbase BTC /USD market to a weighted index of other top spot exchanges.
Positive values means the index is trading at a premium, which means Coinbase is more than the rest of the market.
Negative values means the index is trading at a discount , which means Coinbase is more than the rest of the market.
Coinbase is known for institutional order flow so it's quite useful to know when the exchange is .
When it has a premium you can reasonably assume that Coinbase is bidding hard.
For trading I would mostly use this to confirm a bias on higher time frames, but it could also be used on lower time frames.
The index consists of:
I also made a mistake in the description.
It should be:
Positive values means Coinbase is trading at a premium.
Negative values means Coinbase is trading at a discount.
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