The rally in the Bitcoin (BTC) market to $40,000 fraught with exhaustion when CME futures opened Monday with a gap of $1,575, the first since May 17.

In hindsight, the risk of being disturbed by Bitcoin’s recent bearish pullback, near the $40,000 level, is growing. In addition, the aforementioned CME gap formed between the end of Friday at $37,325 and Monday’s open at $38,900, raising the possibility that the next correction will push Bitcoin down to at least $37,325.

This is due to the general psychological realization of traders that BTC/USD is changing directions to fill the gaps in Bitcoin futures more than 90% of the time. So, for example, traders partially filled the gap that arose on the weekend of April 17-18, 11 days later.

Similarly, in May 2020, the missing weekend light was refurbished at $8,795 to $10,010 immediately after configuration.

The purple lines show filled holes for CME Bitcoin Futures, while the black lines show unfilled holes. Source: TradingView
But over the course of 2020 and 2021, the supersonic bullish trend in Bitcoin left many price indicators missing. The latest of those big gaps came over the long weekend of Christmas last year, with around $2,900 in length, and between $23,745 and $26,650, yet to be filled. Similarly, a new unfilled CME gap will be identified between $18,020 and $19,155 in early December 2020.

The maximum time it takes for traders to close the gap on the CME is three months – the price-light shortage appeared in June 2019 and was filled in September 2019.

It took Bitcoin futures traders three months to fill the gap on the Chicago Mercantile Exchange in July 2019. Source: TradingView
Basics
Macroeconomic fundamentals played a major role between June and September 2019, keeping bitcoin prices away from CME holes lower. First, many investors bought bitcoin as their safe haven when the US-China trade war affected global growth and market sentiment.

Second, the Facebook attacks on the crypto sector with the launch of Libra created more opportunities for Bitcoin.

In 2020, the Federal Reserve used the policy of open expansion as bullish support for Bitcoin. The US Federal Reserve has cut lending rates to nearly zero since the global market crash in March 2020.

At the same time, the Fed began buying government bonds and mortgage-backed securities at a rate of $120 billion per month. It has whetted investors’ appetite for government bonds and the US dollar, and made bitcoin, gold and stocks more attractive as alternative safe havens.

Veteran investors including Stanley Druckenmiller and Paul Tudor Jones announced their participation in the bitcoin markets after the Fed’s extended moves. Meanwhile, Tesla, MicroStrategy, Square, Ruffer, Seetee and other companies have added bitcoin to their balance sheet, citing inflation concerns.

This prevented traders from filling the CME gaps of $23,745-$26,650 and $18,020-19,155 even five months after formation.

Meanwhile, a market analyst on Twitter, known by the alias Planet-of-the-Apes, xCaeser, suggested that traders see $34,000 as a minimum to determine the next market turmoil. In a tweet posted after the price crash on May 19, xCaeser indicated that the $34,000 support would boost Bitcoin’s ability to rally to $47,000. he added:

“If the $34,000 breakout looks for $23,300 and eventually closes the CME gap.”
Bitcoin has broken below $34,000 multiple times since May 19, but the cryptocurrency has rebounded sharply after testing the $30,000-$32,000 range to support each of its bearish moves.

A rising gap in the future
Reaching close to $65,000 in mid-April, bitcoin prices plummeted on profit taking, taking the CME gap from $49,215 to $45,295. At the moment, the missing price indicator is not filled.

This put Bitcoin in a contrarian technical chart – that is, either Bitcoin can correct lower after reaching the $40,000 resistance and filling the CME gap of $37,325-38,900, or it can continue higher to fill 45,295-49 US$215. CME fracture.

Exchange data obtained from network analysis platform CryptoQuant also revealed an impending conflict of bias in the Bitcoin market. Looking back, we can say that both inflows and outflows of BTC from exchanges in recent sessions have decreased. Meanwhile, the number of streaming titles has gone down and streaming titles have gone down, reaching an annual low.

In addition, Elon Musk announced that Tesla will resume the use of the Bitcoin payment option when there is confirmation of reasonable use (about 50%).

Source: CoinTelegraph

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