A CME GAP AT $3,500 LEAVES BITCOIN VULNERABLE TO A COLOSSAL CORRECTION

Posted 14 April, 2020

The Bitcoin price has a CME gap at $3,500, and given the historical tendency of BTC to close it, there exists a possibility that the dominant cryptocurrency may retest the $3,000 region.

Earlier this month, Mark Dow, a former economist at the International Monetary Fund (IMF) and hedge fund manager, called Bitcoin a “short textbook,” noting that the BTC macroeconomic trend remains unfavorable for buyers.

 

bitcoin price

Bitcoin a textbook short based on macro resistance (Source: Mark Dow)

 

CME GAP ALONE IS NOT A REASON TO RETEST BITCOIN LOWS, BUT IT HAS MANY WORRYING SIGNS

 

The CME gap occurs when the Bitcoin price moves after the CME Bitcoin futures market is closed during after market hours.

For instance, if the Bitcoin price was at $6,600 when the futures market closes and it had surges to $7,000 when it opens, there is a $6,600 to $7,000 gap on CME.

Although CME accounts for the bulk of global BTC exchange, the price of bitcoin does not match the gaps in CME. It usually reduces the gap when it is supported by other factors such as momentum, volume, buying or selling pressure, and technical structures.

In fact, a strong argument can be made that the CME gaps are of less importance given the noticeable decline in the volume of the futures market since March.

With the collapse of the US stock market, accredited and institutional investors have noticed signs of a cryptocurrency exit from the market, at least in the foreseeable future. This led to a sharp drop in the Bitcoin futures market, reducing the impact of CME on short-term BTC price trends.

 

bitcoin CME gap

 

4 NEGATIVE FACTORS ARE PRESENT TO TRIGGER A CORRECTION

 

Currently, the Bitcoin price is hovering near the yearly open at $7,100. It has rejected the $7,100 to $7,500 range multiple times in the past week, and a triple rejection often leads to a breakdown to lower support levels.

The technical structure of the BTC, which indicates the need to retest the range from $ 4,800 to $ 5,500, depending on the key Fibonacci levels, together with the $ 3,000 CME vulnerabilities, makes the cryptocurrency a vulnerable fix.

But, some traders foresee the price of Bitcoin reacting to the block reward halving in the first week of May.

Google Trends data shows that the search interest for the term “Bitcoin halving” is nearing all-time highs, indicating that investors are anticipating the event.

 

"Bitcoin halving" search interest nearing all-time highs. $BTC pic.twitter.com/uIXT840au3

— Zack Voell (@zackvoell) April 13, 2020

 

View image on Twitter

 

Historical data show that BTC prices rise sharply immediately after halving, and then stabilize in the near future. In the last two cuts, Bitcoin saw extended rallies 10-11 months after activation halved.

Upper resistance levels, a small CME gap, an annual stagnation, and a relatively small volume indicate a significant short-term withdrawal of Bitcoin, but a halved potential BTC variable will remain.

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