Bitcoin’s $10k Value Pushed Down by CME Futures Price Gap

BTC jumped over the $10,000 price point on Saturday and touched a 2020 high of $10,180 on Sunday. The value dropped to $9,790 per BTC during the early morning trading sessions on Monday. Traders, analysts, and speculators have been noticing a trend that’s happened a few times since early last year and it may be the reason behind this quick price drop.

Just recently BTC prices surpassed the $10,000 zone and held above that region for around 24 hours. Some speculators believe the price of BTC dipped below the $10k range on Monday, after the price aligned with the price gap on CME Group’s global market exchange.

During the course of 2019, crypto traders have noticed that BTC spot market prices have seen quick surges and drops that leave a gap unfilled on BTC futures charts.

After BTC’s Quick Surge Over $10k, Spot Prices Dip Filling the Gap on CME Bitcoin Futures Charts

February 2020’s $10k drop to the $9,800 range follows the unfilled price gap that took place on the Chicago Mercantile Exchange (CME) Bitcoin Futures chart. The gap appeared when CME’s bitcoin futures closed at $9,850 on Friday and when CME’s global markets opened again at $10,000 the negative action, or unfilled gap, brought prices down $300 in the blink of an eye.

Bitcoin's $10k Value Pushed Down by CME Futures Price Gap

This type of market action is called “filling the gap” or “closing the gap” when people analyze charts and price movements. Spot market and futures market prices can be different as derivatives investors are betting on the future value of an asset, while spot market traders are swapping assets in real-time. Cryptocurrency markets are rare because they operate 24 hours a day and seven days a week. The derivatives markets should grow mature with time and many people think that each market can affect each other by placing different types of wagers on each other.

So a gap forms when the price of an asset like BTC surges faster than usual and it leaves a gap on derivatives market charts while trading hours are closed. Because of this cryptocurrency markets can see a “close the gap” scenario because of the underlying cash markets that are running 24/7. Not only is this done with CME Group’s bitcoin futures but unregulated derivatives markets can be used to close the gap as well. For instance, the Twitter account Whale Trades noticed $2 million worth of BTC bought on Bitmex by a whale and wrote: “Wait for the bounce, then short the corn.”

Bitcoin's $10k Value Pushed Down by CME Futures Price Gap

BTC price on February 10, 2020, at 9 a.m. ET.

Not the First Unfilled Gap Scenario

Monday’s action is not the first ‘close the gap’ scenario with BTC and the asset has seen a few unfilled gaps in 2019 as well. During the rally in June 2019, a few gaps were left behind but there were many gaps filled with price corrections following. At the time, traders didn’t know what to expect as gap closures could be bullish or bearish depending on market sentiment.

This time around, unlike the surge in June, traders and analysts believe the $10k BTC price surge is the “real deal.” Onchain analyst and Adaptive Fund partner Willy Woo tweeted about breaking the psychological $10k zone on Sunday. “This breakout is the real deal — Fundamental investment activity is backing this $10k breakout”, Woo tweeted. Besides Woo, a slew of other traders believe this breakout is quite different than the spike last summer as well.

Price gaps usually get filled but that’s not always the case and there can be a few forgotten gaps over a long period of time. There were plenty of gaps in 2017 when BTC’s price rose exponentially as the value jumped $1,000 in a single day and continued to do this for a couple of days in a row. Looking at the long term cycles of an asset, traders typically visualize forgotten unfilled gaps as strong areas of support or resistance. The gaps still exist, they were just never filled. Long periods of time doesn’t mean they can’t be eventually, as bears and crypto traders who love to short always focus on specific bottom targets.

Right now spot markets and futures contracts on CME Group and other crypto derivatives markets charts indicate that prices are near equal. However, CME’s price quotes show that in March, April, and May predictions are in the $10,100 range.

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