Bull trap fears engulf Bitcoin market as BTC paints CME gap below $40K
Bitcoin’s price tumbled below $20,000, and the red tape of the US Commodity Futures Trading Commission (CFTC) has not been enough to stop the market from doing the same.
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The bitcoin futures market is pricing in a massive selloff just ahead of the U.S. federal government’s decision on the first bitcoin futures contracts.
The march towards the $40,000 mark in the bitcoin (BTC) market is threatening to gain steam as Chicago Mercantile Exchange futures opened Monday with a spread of $1,575, the first since the 17th trading day. May. In hindsight, the downside risks have been amplified by bitcoin’s recent downturn near $40,000. In addition, on the CME, the aforementioned gap formed between Friday’s close at $37,325 and Monday’s opening at $38,900, raising the possibility that the next correction will drop bitcoin’s supply to at least $37,325. This is due to the general psychological perception among traders that BTC/USD reverses its trends over 90% of the time to fill gaps in bitcoin futures. Thus, the traders partially closed the gap left by the weekend session on the 17th and 18th. April was born 11 days later. Similarly, in May 2020, the missing exit candle between $8,795 and $10,010 was filled upon formation. Purple lines indicate filled spreads of CME bitcoin futures, black lines indicate unfilled spreads. Source: TradingView But throughout 2020 and early 2021, the supersonic uptrend in the bitcoin market has left many price candles in the dust. The last of these big holes arose during last year’s long Christmas weekend, about $2,900 long, between $23,745 and $26,650, which has yet to be filled. Similarly, there is an unfulfilled gap in the WEC between $18,020 and $19,155 until early December 2020. It took traders up to three months to close the gap on the CME – the missing price candle in question appeared in June 2019 and closed in September 2019. Bitcoin futures traders needed three months to fill the July 2019 CME void. Source: TradingView
Macroeconomic fundamentals played a large role in keeping bitcoin prices out of lower CME spreads between June and September 2019. First, many investors bought bitcoin as a safe haven when the trade war between the US and China negatively impacted global growth and market sentiment. Second, Facebook’s entry into the cryptocurrency sector with the launch of Libra has created additional opportunities for bitcoin’s growth. In 2020, the Federal Reserve’s open-ended expansionary policies served as rising support for bitcoin. The US Federal Reserve moved its benchmark interest rate closer to zero after global markets fell in March 2020. At the same time, the Fed began buying $120 billion worth of Treasury bonds and mortgage-backed securities each month. This has reduced investor interest in Treasury bill rates and the US dollar and increased the appeal of bitcoin, gold and equities as alternative safe havens. Veteran investors like Stanley Druckenmiller and Paul Tudor Jones have announced their participation in the bitcoin market following the Fed’s easing measures. Meanwhile, Tesla, MicroStrategy, Square, Ruffer, Seetee and other companies have also added bitcoin to their balance sheets, fearing inflation. This has somewhat deterred traders from filling the $23,745-$26,650 and $18,020-$19,155 spreads on the CME, even five months after their inception. A market analyst on Twitter, known by the pseudonym xCaeser, known by the pseudonym Planet of the Apes, suggested traders keep an eye on $34,000 as a threshold to determine the next market trend. In his tweet after the price collapse on the 19th. May xCaeser noted that holding $34,000 as support would increase bitcoin’s rally potential to $47,000. He added: If the $34,000 is exceeded, I want to get to $23,300 and maybe fill the gap in the WWC. Bitcoin collapsed after the 19th. May several times below $34,000, but the cryptocurrency has rebounded strongly and tested the $30,000 – $32,000 area as support after each of its downward moves.
After reaching nearly $65,000 in mid-April, the price of bitcoin fell due to profit taking, leaving a gap between $49,215 and $45,295 on the CME. The missed prize candle remains unfulfilled so far. This has put bitcoin in a contradictory technical situation: either bitcoin can correct downward after approaching the $40,000 resistance level and fill the CME gap of $37,325 to $38,900, or it can continue to advance and fill the CME gap of $45,295 to $49,215. Stock market data from analysis platform CryptoQuant shows an impending conflict in the bitcoin market. In retrospect, the inflow and outflow of BTC on exchanges has decreased over the past few sessions. At the same time, the number of incoming addresses fell, while the number of outgoing addresses reached its lowest level for the year. Contradictory sentiment in $BTC has a negative effect on withdrawals and deposits on exchanges. – Inbound addresses are down – Outbound addresses are down to their lowest level in a year – 15.5K Check out the chartshttps://t.co/KStlUlSpt0 pic.twitter.com/2ahdyQFCoc – CryptoQuant.com (@cryptoquant_com) 14. June 2021 Additionally, Elon Musk said Tesla would resume bitcoin payment options once sufficient (~50%) use of clean energy by miners is confirmed. The billionaire was responding to comments by Magda Wierzycka, CEO of Sygnia, who called him a market manipulator. Related: Sygnia CEO blames Elon Musk for pumping and selling bitcoins. Bitcoin’s prices moved up nicely after Musk’s comments, said Yuri Mazur, head of data analysis at broker CEX.IO, adding that this increases the cryptocurrency’s potential to close the CME’s $45,295 to $49,215 gap. He told Cointelegraph: Prices currently appear to be pulling back from their highs of the past 24 hours, an unexpected rebound could occur if musclebound buyers decide to wake up the market. Musk’s tweets played a big role in the rise of the bitcoin price on the 19th. Mars dropped from $43,500 to $30,000. His company Tesla still has about $1.3 billion in BTC as an alternative to cash.