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Bitcoin Price Analysis: BTC Surge Leaves $570 CME Gap

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Bitcoin price posted an impressive 8.7% surge over the weekend has left another sizeable gap in the CME Bitcoin Futures chart - this time around the psychological $9K mark. Are we going to be in for a turbulent week? Let’s take a look.

4-Hour Bitcoin Price CME Futures Chart

bitcoin gap

Between the 15-16 June, bullish traders catapulted Bitcoin price 00 over the critical $9K level after rejecting a bearish rising wedge pattern the day before. Because of this new impulse movement during the traditional financial market close, it caused a $570 gap to appear on the CME bitcoin futures chart between $8,485 and $9,055.

As mentioned in a previous analysis, these CME gaps have a tendency to act like magnets on the price action and often invite traders to close them by moving in the opposite direction. A gap like this, as shown above, was caused by a freak surge in bullish momentum over the weekend, and so now bearish traders are being tempted to sell or short the market in order to close it.

The distance between last week’s close and the new week open represents a considerable 6.39% difference in price. If Bitcoin’s price continues to correct from its recent YTD-high, it runs the risk of retracing back the $9K level and triggering bears to fill the gap.

Looking at the current market momentum, we can see that BTC price appears to be losing altitude as buying volume on the histogram decreases and the RSI returns back into the index channel.

If the 12MA bearishly diverges with the 26MA as well, we will have another firm bearish signal that BTC is likely to continue declining.

Bitfinex BTC/USD Shorts

Bitcoin short
Looking at the Bitfinex BTC derivative market, we can see that there’s been a substantial 40% hike in short positions over the last 7 days despite Bitcoin’s price reaching a new YTD-high. This is the biggest rise in shorts since Bitcoin hit the $5K level. 

These extra 7,359 shorts tell us two things.

  •  Derivative traders are bearish right now and are not expecting Bitcoin’s price to print a new high above the strong $9.4K sell wall. It’s likely that they’re anticipating bullish traders to become exhausted and the CME gap to close back down to $8,485.
  •  IF Bitcoin buyers do manage to break above the $9.4K mark off the back of another surging rally, however, then the resulting short squeeze would undoubtedly catapult Bitcoin’s price even further - potentially above and beyond the fabled $10K mark.

Either way, we could be in for a very volatile week if any of these two scenarios play out.

Which way do you think Bitcoin is heading this week? Let us know your thoughts in the comment section below!

Images courtesy of Shutterstock, Tradingview.com

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