Bitcoin Experiences Price Drop: Focus Turns to Runaway Gap Below $80K
Bitcoin’s price has dropped 10% to $86,300, breaking out of a stabilizing range of $90,000-$110,000. A notable focus is the ‘runaway gap’ below $80,000 in CME futures that appeared following significant market events. Analysis suggests that while gaps often get filled, runaway gaps may remain unaddressed for longer periods.
Bitcoin (BTC) experienced a significant drop of 10% this week, currently trading at $86,300, as it moves away from a previously established trading range between $90,000 and $110,000. This bearish breakdown prompts traders to analyze charts for indications of potential future price movements. A focal point in their analysis is the ‘runaway gap’ observed in the CME bitcoin futures market, positioned below $80,000, which emerged approximately three months ago.
A price gap represents a void on a chart between a closing or high price one day and the subsequent opening price, indicating an absence of trading activity within that price range. If this gap appears during an ongoing trend, it is classified as a runaway or continuation gap. Notably, while the bitcoin spot market operates continuously, the CME bitcoin futures market is accessible for 23 hours each day, closing for maintenance for one hour daily.
The disappearance of this gap can be attributed to price movements following President Trump’s election victory on November 4, which saw an upward opening at $81,210, above the election day’s peak of $77,930. Many traders believe that gaps are eventually addressed as the market stabilizes, reflecting a movement towards equilibrium.
“Historically, CME gaps are filled eventually, and it is usually hard to say when,” stated Nicolai Sondergaard, a research analyst at Nansen, in a recent message on Telegram. He elaborated that recent unpredictable market events have significantly influenced downward price corrections, emphasizing that without those events, the CME gap may not have come into focus at this time.
The current risk assessment indicators at Nansen indicate a risk-averse stance, suggesting a potential for filling the CME gap. However, standard technical analysis posits that while common gaps and exhaustion gaps tend to be filled swiftly, the probability of runaway gaps being addressed is considerably lower, adding an element of uncertainty.
It is also essential to note that a gap has formed between February 24 and February 25, marking a price drop from the prolonged consolidation. The timing of which gap will be addressed first remains ambiguous, adding further speculation to market movements.
In conclusion, Bitcoin’s recent price drop to $86,300 has drawn attention to the ‘runaway gap’ below $80,000 in CME bitcoin futures, a significant element within ongoing market analysis. The notion that gaps are eventually filled continues to circulate among traders, though the timing remains uncertain. As market dynamics evolve, the eventual addressing of these price gaps will be closely monitored.
Original Source: www.tradingview.com
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