BTC tore through the psychological $10,000 barrier over the weekend as the incredible 2019 recovery continues apace, leaving a trail of liquidated short sellers in its wake. The weekly close topped out at a yearly high of $11,400, bringing us to levels we haven’t seen in almost two years. The big question is, is there more in store for the resurgent BTC, or do the bulls need a rest? Let’s find out.
All Evidence Points to a Drop
The picture from here is a little more uncertain, as we are increasingly nearing over-exposed levels. The MACD moving averages, which crossed bullish around June 15 just before the leap from $8,000 to today’s value, are finally catching up and levelling out, suggesting that the move has, temporarily at least, run out of steam. This is backed up by the RSI which kissed 80 as BTC topped out last night, which verges on overbought territory.
All his data suggests that we could be in for a period of consolidation or some downside as BTC takes a breather. This shouldn’t concern bulls too much however, as BTC regularly saw big corrections on its way to $20,000 in 2017, sometimes as much as 30%, and a period of stagnation could finally give alts the chance to play catch up.
Filling the Gaps
In a sign that futures contracts are having a bigger and bigger impact in the crypto space, talk of ‘filling the CME gap’ has been increasing, but what does this mean and what impact does it have on BTC’s movements? In traditional markets, the value of an asset can open on a Monday morning higher or lower than where it closed on the prior Friday, thus creating a gap on the chart which looks like this:
Crypto of course doesn’t close, but the CME does and so crypto margin trading platforms like Bitmex and Deberit operate while CME sleeps, creating gaps on the CME charts when it opens again. So, how and why do these gaps get filled? Generally speaking, the price needs to resolve all areas of potential price discovery available to buyers and sellers in order to evaluate the true value of the asset. In practice a gap up often gets “faded” (sold off) until the gap is filled and then rallies higher, meaning that if BTC does correct then these are useful guides to see where it might cover. In BTC’s case, these are approximately $10,000 to $10,700 and then $8,500-$9,000. CME gaps usually end up getting filled over time, so look out for these levels if BTC does indeed correct.